You can access earlier portfolio updates here:
This report will
probably be quite short because there’s not much to report. Our steady-eddy DIY Portfolio continues to do well. We are preparing for some money coming out and
then, even more coming back into our stock portfolio.
As always, we’ll try to
remain in a position for some buying if (or when we should rather say) markets
happen to go south.
Many perhaps consider
our recipe dull and borderline simplistic. Yet you can’t deny its efficiency,
but the real secret may just be to have the nerves to stick to it no matter the
circumstances.
Once more, I’ll remind you that I
am not an investment or tax professional of any kind. The intent of this blog
is not to give specific investing advice. Before investing yourself, we suggest
you do all necessary research and consult a licensed financial professional if
need be.
React Calmly to Market Gyrations
We may soon face
something even more daring than you know who, the dreaded coronavirus. Some may
fear it will not only impact our stock holdings but could even threaten
humanity itself.
Without being too
casual about it, let’s just stay calm because it won’t be the first nor the
last crisis, financial or otherwise, we resilient humans face.
Our way to go about it
is simple. Because nobody knows where the markets are heading, we never try to
base our portfolio decisions on anticipation. We only think of selling if
things are going well (prices have risen) and in the same matter, only think of
buying if they are going bad (prices have fallen).
So, to resume on
philosophy, stay calm and be prepared for some buying if things really go bad.
We know, easier said than done.
Only Anticipating Because of Cash Flow Needs
We won’t anticipate what
markets, or a particular stock will do. But we still take into account what our
personal circumstances are and anticipate what they will be. So, if we
anticipate we will or may need money soon, we will make sure enough of our
money is accessible. And it’s obvious money invested in stocks is not easily
accessible.
We will need some extra
cash in the next few months, that’s why our DIY Portfolio
is presently heavier on bonds (around 15%). We bought some short-term bonds not
because we are afraid that markets will fall but rather because we know we will
need to take some money out of our investments.
Later this year, we
will have some new money accessible to invest so we will then buy stocks and
our bond allocation will come back down, probably even close to zero.
Even though we don’t
care and never bother about short-term gyrations, these special circumstances still
gave us some chances to experience some market swings with our 80% stocks 15%
bonds and 5% cash portfolio.
We’ve noticed that our
portfolio did a lot better than the markets during slumps or down days. Our
portfolio still went down, but not as much as the markets. This is not a
surprise with our present allocation.
What is a little more
unexpected is that our portfolio almost did as well as the markets during
surges or up days.
We think the nature of
the stocks we buy has a lot to do with it. Sure, our present more conservative
allocation had some impact. But the steady solid stocks we choose to own
probably had an even more prominent effect.
We’ll see how things go
in the next few months.
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