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The month that was:
The market bounced back strongly in May. The Nasdaq went up by almost 7%, the S&P 500 went up by about 5%, and the Dow went up by about 2%. On May 16th, the Dow closed above 40,000 for the first time ever.
The CPI report on May 15th showed that inflation cooled to 3.4%, which made investors feel better after the hot reports earlier in the year. The Fed kept interest rates the same on May 1st, but Fed Chair Powell said that the next move was unlikely to be a rate hike.
Nvidia was the star once again. On May 22nd, it reported that its sales tripled compared to last year. It also announced a 10-for-1 stock split.
What is a stock split? When a company splits its stock, it gives each shareholder more shares, but each share is worth less. In a 10-for-1 split, if you owned 1 share of Nvidia worth about $1,000, you would now own 10 shares worth about $100 each. You still own exactly the same amount of the company, and your shares are still worth $1,000 in total. It is like cutting a pizza into 10 slices instead of 1. You have more slices, but you don't have more pizza.
So why do companies split their stock? When a share price gets very high, it can be harder for regular investors, especially young investors like me, to buy a whole share. A lower share price makes the stock easier to buy. A split doesn't change the value of the company, but it is often a sign that the company's stock has gone up a lot and that management is confident about the future.
Buys -
Bought 7 PII at $87.53
Polaris makes off-road vehicles, snowmobiles, and motorcycles. Its sales have slowed down because high interest rates make it more expensive for people to buy big items with loans. Polaris has raised its dividend for more than 25 years in a row, and the stock pays about 3%. I started a new position at a low price.
Bought 7 SWK at $89.92
Last July, I added to my position in SWK at about $99. Since then, the price has gone back down below $90. SWK is still cutting costs, and it has raised its dividend for more than 50 years in a row, so I bought shares back.
Bought 4 HSY at $195.26
I added a few more shares to my Hershey position.
Bought 1 DT at $45.76
I added one more share of Dynatrace, which I bought for the first time last month.
Sells -
Sold 13 TREX at $90.81
I bought 10 shares of Trex last November at $57.48. Since then, the stock has gone up about 58%! I sold my shares to lock in the profit. It is important to take profits sometimes, especially when a stock has gone up a lot in a short time.
Sold 25 INTC at $30.32
After Intel's weak forecast last month, I decided to sell my shares for a loss of about 14%. Intel is spending huge amounts of money on new factories, and it could take many years before that pays off. I want to own companies that are already making strong profits.
Thanks for reading my newsletter!