Portfolio Update: New Addition (BABA; November 17, 2014)

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One thing I’ve been realizing as of late is that buying shares of stocks is a whole heck of a lot easier than buying rental property. ūüôā As such, I used today as another opportunity to pick up some more shares of Alibaba (BABA).

Payday is not until this upcoming Friday, but I thought I would jump the gun and buy some shares today, just as a hedge in case the stock keeps climbing upwards. I picked up 34 shares at $114.71/share. I now own 152 shares of BABA.

What’s the plan here? For one, I’m diversifying my portfolio away from rental properties. Two, I’m transferring some capital into a liquid investment. And lastly, I’m taking a gamble on future appreciation!

In the past, I’ve owned shares of Apple (AAPL), and Tesla Motors (TSLA). In each of those cases, I bet on the right horse… but my contributions weren’t enough to make a noticeable dent. I watched as TSLA climbed from $55/share all the way up to around $166/share. Very solid performance indeed, but with such a minuscule ownership stake, I didn’t reap any massive rewards!

As is often stated, “it takes money to make money.” You can guess right on the next hyper-growth stock all day long, but if you don’t “back up the truck“, it won’t mean much in the big picture. So, rain or shine, up or down, I’m going to be looking to add more shares of BABA to the portfolio.

Note: This is just another one of my side hustle plays, not a core investment strategy! This type of investing¬†is definitely not something I would recommend anyone else try and duplicate. It is inherently risky… which probably goes without saying.

Now that I don’t have any more real estate deals on the horizon lined up for me, I’m just going to keep on funneling¬†spare capital back into my brokerage account to pick up more shares of BABA. That, and perhaps some other hyper-growth stocks as they pull back. I would love to get in on TSLA again, but that stock looks a bit too frothy at the present moment…

Although my investment moves are ALWAYS¬†subject to change (I can’t anticipate when the next real estate deal will take place), ideally, I would like to be able to keep building up my stock positions. Since I’m not going to be retiring for at least another year or so, I don’t really have a critical need for dividend growth stocks right now (the rental properties are my primary source of cash flow). Rather, it’s the substantial appreciation gains that I’m targeting. Should the need for extra cash flow become imminent sooner rather than later, of course I will¬†cash out of the growth stocks and put the gains back into dividend growth stocks, instead.

Until then, it’s hyper-growth that I’m seeking. Higher risk, higher reward. Let’s hope the markets continue to hold up.

Fight On!

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HMBMr. FrugalwoodsFI FighterEvanMy Dividend Pipeline Recent comment authors
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Jason @ Islands of Investing
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Hey FI Fighter,

I like your strategy of looking for some aggressive growth, with a reasonably small proportion of your portfolio. I’m glad you put that nice, big black disclaimer in you post, because I’ve heard some real horror stories about people putting their life savings into a single stock, only to see it plummet and be worth nothing!

I’m looking at some similar ‘growth’ stock investments, as my stock portfolio is still relatively small, but I don’t have the diversification of other assets that you do (other than my home I live in).

Fingers crossed for some great success from Alibaba!

Cheers,

Jason

No Nonsense Landlord
Guest

I used to chase many of the high-flyer stock in my early days of investing. I had days where my portfolio went up by $40K (yes, that’s $40,000 in a day). And when the .com bubble popped, they went down just as fast.

Good luck. Stay focused. Keep the majority of what you have in SPY or IVV type ETFs.

Dividend Growth Investor
Guest

I am afraid that you are now recklessly speculating, rather than searching for reasonable investments. I am also afraid you might have overextended yourself with the rental properties. I am hopeful all works out well for you though, and you do not get any loss of occupancy or major repairs to do.

Billy
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Billy

I can understand why some of us will always trust our own instincts more than anything else. I see myself in another camp. I don’t trust my gut instinct. I try to verify against it and see whether that instinct holds any water. The problem is that we will never be truly objective when dealing with investment. If that’s the case, no one will invest in rental business because the long term ROI is almost always lower than that of stock market, and I say stock market I mean index, not individual hot stocks.

My Dividend Pipeline
Guest

Even though I focus primarily on dividend stocks, I almost pulled the trigger on some shares back in the 80’s. In the end I decided to buy some additional shares of beaten down energy companies. BABA may be a better capital appreciation play, but I will probably stick with income producing assets.

MDP

Evan
Guest

These types of purchases are left to my investment club dollars. I can’t figure out what makes this a 280 Billion dollar company when it doesn’t even turn a profit (according to google finance). But I said the same thing about TSLA and AMZN and I was way off the mark there!

I think there is an absolute different mindset for value investors vs growth investors.

Mr. Frugalwoods
Guest

Good luck!

Not something I’d do, but I tend to prefer the boring stuff ūüôā

Is this a buy and hold, or something you’re going to continually re-evaluate going forward? That’s one of the things that keeps me away from individual stocks… I want to to be able to go off-grid for a month at a time and feel confident that I’m not missing important actionable news about my investments.

HMB
Guest

Hey FIFighter. I have yet to look at your new real estate acquisitions, but I agree with the premise of investing for growth, even when it’s not certain. I bought shares of AAPL and TLSA last month during a lower point and have enjoyed some growth as well as dividend from APPL. However, like you, I just bought them focusing on growth and I also plan to keep them for the long term. I’m already well diversified so this is not going to leave me out to burn if things go badly. I think this too is the key; our… Read more »

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