We are now in the month of April and it’s time for another one of my portfolio reviews. Let’s get into it:
Positions
Apple (AAPL) – 18.46%
Qualcomm (QCOM) – 10.55%
Cisco (CSCO) – 9.22%
Abbvie (ABBV) – 8.24%
AT&T (T) – 6.88%
Unilever (UN) – 6.88%
Vanguard Emerging Markets ETF (VFEM) – 6.71%
Mcdonald’s (MCD) – 6.33%
Shell (RDS.B) – 6.29%
Pfizer (PFE) – 6.09%
iShares Physical Gold ETF (SGLN) – 5.46%
Activision Blizzard (ATVI) – 5.20%
BP (BP) – 3.43%
Closed Positions
Caterpillar (CAT)
If you have been following my Portfolio Reviews you would now that I have used the recent pullback to change my strategy a bit. What I have been doing is removing positions that I don’t really have a plan for. Caterpillar was one of them.
I bought them primarily because of the valuation and their Metrics looking good. But other than that I didn’t know that much about the company or much about the industry in general.
I knew enough to see that they are a solid long-term company and that is still the case. Nothing wrong with the company, in fact they will most probably do well in the long-term.
But it is not a company that I personally want to hold. They are too cyclical and I would be in uncharted territory with them if we go into an economic downturn. I have enough cyclical companies as it is and I just decided to let go of Caterpillar. I had the chance to do so at around break-even prices in the recent upswing in the markets.
New Positions
iShares Physical Gold ETF
This is a bit of an unusual position for me, but I decided it is not the worst idea to have some exposure to gold at the moment. I am not into this position to make any gains per se, but more as a way to perserve some of my cash.
For me the price of gold is the real value of inflation in the economy. And here is something interesting I have seen. Let’s take a look at two graphs.
Dow Jones Graph Measured in Dollars
As you can see we have a great consistent uptrend, providing a great return to your money. But now let’s look at it from another perspective
Dow Jones Graph Measured in Gold
If we take a look at the Dow’s returns in gold things get a little different. Or in other words the Dow is still at the levels it’s been 100 years ago. Of course if you take into account dividends the stocks will prevail over the long-term, that is completely normal.
After all on one hand you have companies that produce, reinvest and increase their productivity over time. On the other you have a rock that does nothing. But it goes to show that the real returns of the stock market are a bit different when you take inflation into account.
That’s why I would like to have a small part of my portfolio in gold. I don’t expect it to gain in value, but it is a place I would like to keep some of my money. And also I don’t know for how long I am going to keep this position.
If we see the stock market go down I might use this position to buy stocks. But at the moment it is a good place for me to store some cash.
Plans for The Month
We are in a very strange position at the moment. The economy is getting weaker and weaker, but the stock market keeps going up. Now I will lie if I tell you that I have any idea where the market is going to be in the near future.
It might go up, it might go down, it might go in a triangular shape, I just don’t know. What I can do is examine some of the companies, how they react to the enviroment and wait for them to reach a good price for me to buy. That has been my strategy before, that is my strategy now.
The difference is that before I was looking at companies and waiting some of them to go into sale so I can buy. Now my strategy is to only look at the best companies on my Watchlist and wait some of them to reach fair value. This strategy requires more patience as most of those companies rarely goes on sale.
For example one of them was Mcdonald’s. It was on my watchlist for a long time and it finally reached a good value a couple weeks ago. I managed to initiate a position and I am now up 35% just 2 weeks later.
On one hand that is great right? Well yes, but now I cannot add to that positions as it has already gone up too much and is out of the fair value zone. That’s what I mean – good companies stay undervalued very rarely and for a very short time.
Conclusion
Before we conclude I just wanted to let you know that I will start doing my portfolio reviews quarterly from now on. I am long-term investor and there is just not enough movement in my portfolio every month to be worth doing separate articles.
This way by reducing quantity I can increase the quality of those reviews. Instead of short reviews every month I can do a more in-depth quarterly one.
So this will be all from me today. Hope you had a good read. Also I have published a small booklet named “How to Build a Monthly Dividend Portfolio”. If you are interested you can download it Here – it’s absolutely free for my readers.
Thank you all for your time, wish you a good time and stay safe.
Full Disclosure : I am/ we are long AAPL, UN, T, PFE, ABBV, RDS.B, VFEM, MCD, CSCO, QCOM, ATVI, BP, SGLN
Additional Disclosure : This article is meant to identify an idea for further research and analysis and should not be taken as a recommendation to invest. It does not provide individualised advice or recommendations for any specific reader. Also note that I may not cover all relevant risks related to the ideas presented in the article.
Readers should conduct their own due diligence and carefully consider their own investing objectives, risk tolerance, time horizon, tax situation, liquidity needs and concentration levels. I am not a financial advisor and this article is for educational and personal accountability reasons only.