Stock Talk

I've referred often to the stock market as the Teflon Stock Market because it seems that any small or major socio-political-economic event that gets occurs is casually brushed off by investors. Nothing seems to stick to this market. The day the Mad King got elected the market went down 1500 points but after digesting it, it went on to set record high's on an almost daily basis. I also think about how much technology has changed investing landscape and wonder if these elements are creating a situation where bear market cycles are getting shorter and shorter. Have we reached a point where we can say that we will have very little in the way of stock market "crash"? I offer some takes in this episode and try to dive in a bit on this concept.

In this final instalment of my Investment Decision series podcasts, I shares my thought process that went into buying shares of Priceline (now called Booking Holdings) during the February mini-meltdown. When the market was going haywire in early February, I was watching to see if any stocks that I had on my wish list, were suddenly attractively priced. Priceline was a stock I've had on my wishlist for long while but I had never been willing to pull the trigger and get into it. During the mini-meltdown, the stock had made a big move downward, so I reviewed my notes to see if the fundamentals of the business were still intact. As always, for every stock that I am evaluating I utilize my 8 question framework.

In this third instalment of my Investment Decision series podcasts, I shares my thought process that went into buying shares of Baidu during the February mini-meltdown. When the market was going haywire in early February, I was watching to see if any stocks that I had on my wish list, were suddenly attractively priced. Baidu had made a big move downward, so I reviewed my notes to see if the fundamentals of the business were still intact. As always, for every stock that I am evaluating I utilize my 8 question framework.

In part 1, I shared my investment decisions to buy more shares in stocks I already owned as well as my decision to sell a portion of my short position on the S&P 500 index. During February I also took advantage of the pullback in share prices to add a few new stocks to my portfolio as I felt they had now become attractively priced. I will share my evaluations for each stock, all of which involve answering the 8 questions, I ask each time I am analyzing a stock. My first new stock that I added was Walmart.

As we finished January it looked like the stock market could do no wrong. Investors were all-in on stocks. Investor sentiment was downright giddy. Cash positions were at generational lows. Everything was awesome.

Then February arrived.

The first few weeks were dramatic. There were days when the Dow Jones Industrials were down 1500 points. 500-800 intraday swings were almost becoming normal after literally a year where there was nary a price change greater or less than 2 percent. There are so many reasons being cited. At the end it was a stressful month for investors.

For me it was shopping time.  I was looking to buy back into some broad market ETF’s but the price falls were not deep enough to justify. So I’m happy to wait. As bad as watching the markets go down 1000 points, the reality is it only represented a 2-4 percent drop. Put this into context, on Black Monday in 1987, the Dow Jones Industrials went down over 20 percent. THAT is a crash. What happened in February was a flesh wound…if that. Context. I had my list of stocks and it was just a matter of jumping on the one’s that were taking a big time beating. A few did pop up and I jumped in. 

I made quite a few moves and so I decided to break them down into a series of podcasts. In Part 1, I’ll share the decisions involving buying more shares of stocks and ETF’s I already own as well as selling. In Parts 2, 3, and 4 I will share my thought processes that went into buying some new stocks.

In the second part of my review of Morgan Housel's terrific presentation at the MicroCap Leadership Summit, I share his takeaways on the remaining two historical cases he cites that can teach us a lot about investing.  In this part of his presentation he talks about State of the Union speeches and the Wright Brothers. Some really insightful perspectives.

I have to be honest, I'm getting a bit of bro love for this Morgan Housel of the Collaborative Funds. He just keeps hitting his blog posts out of the park. I may be projecting a bit of Confirmation Bias here and I'm fine with it because go to the heart of what I do as an investment coach. I've referred to his posts many times here and I recommend you check out his blog. A lot of times, we can learn more about something when we view them from a totally different perspective. Housel  demonstrates this in an excellent presentation he delivered at the MicroCap Leadership Summit where he examined 5 seminal events in history and parsed out some takeaway learning points that can be applied to the investing realm. It's a fantastic presentation full of learnings and I wanted to share them with you. It turned out there was so much insights to gain, that I had to break the podcast down into two separate episodes. In Part 1, I offer some takes on his cases involving nuclear power plants in Austria, the war on cancer, and 9/11.

Three years ago I decided to try an experiment. I setup an account with one of the big Robo Adviser firms and invested $5000 of my own money into it. My goal was to go through the process and blog about my experience and more importantly, try to find if using this type of service can generate better returns than if I did it myself or used a traditional adviser. I said that we need a good five years to really get a handle on how effective these services are compared to traditional wealth management services. Well, we’ve now crossed the 3-year anniversary of my ROBO account, so let’s take a look at how it’s doing now.

We start a new year with hope that the investment decisions we make will lead to positive outcomes, hopefully this year, but if not then at some point in the future.  The year has started off with a bang as the markets around the world have surged and continue to set records. In this episode, I share the thought processes I was using that lead to my investment decisions this past month. 

DECISIONS TAKEN:

Added to position in Nutrien (Ticker: NTR)

Added to position in Imperial Oil (Ticker: IMO)

Added to position in Spider US Financials ETF (Ticker: XLF)

Sold shares in Nike (Ticker: NKE) for a 22.5% gain (factoring in currencies)