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The month that was:
February started well, but it ended badly. On February 19th, the S&P 500 closed at a record high. After that, the market fell as investors worried about tariffs and a slowing economy. For the whole month, the Nasdaq went down by about 4%, the Dow went down by about 1.6%, and the S&P 500 went down by about 1.4%.
On February 1st, President Trump announced tariffs of 25% on goods from Canada and Mexico and 10% on goods from China. Two days later, he paused the tariffs on Canada and Mexico for 30 days, but the tariffs on China started. Near the end of the month, a survey showed that consumer confidence fell by the most since 2021, and Walmart warned that its profits would grow more slowly this year.
What is a tariff? A tariff is a tax on goods that come from another country. When an American company imports something, like a car part from Mexico or a toy from China, the company has to pay the tariff to the U.S. government. The goal of tariffs is to make foreign goods more expensive, so that people buy more things made in America and companies build more factories here.
But tariffs also have downsides. Companies that import goods often raise their prices to cover the cost of the tariff, which means customers end up paying more. That can make inflation go up. Other countries can also put tariffs on American goods in return, which hurts American companies that sell overseas. This is called a trade war. Many companies, like toolmakers, shoe companies, and car makers, make a lot of their products in other countries, so tariffs could hurt their profits.
Another big story is the new Department of Government Efficiency, or DOGE, which is trying to cut government spending. This worried investors in companies that get a lot of their business from government contracts, like SAIC and CACI.
Buys -
Bought 3 CACI at $335.12
CACI fell a lot because of worries about government spending cuts. CACI mostly works on defense and intelligence projects, which I think are less likely to be cut, so I added more shares at a lower price.
Bought 16 DG at $72.26
Dollar General's stock is still near its lowest price in years. Its CEO, Todd Vasos, came back to the company in 2023 to fix its stores, and I think it is starting to turn around. I started a long-term position.
Bought 10 HSY at $146.20
Hershey's stock fell to its lowest price in years because of record-high cocoa prices. Cocoa prices won't stay this high forever, so I bought shares back at a much lower price than I sold them for in December.
Bought 10 NKE at $82.03
Nike has a new CEO, Elliott Hill, who used to work at Nike for many years. He is trying to get Nike back to focusing on sports and running shoes. I bought back a few shares.
Bought 2 EFX at $245.76
Bought 1 FDS at $455.29
Equifax is one of the three main credit bureaus that track people's credit scores, which I wrote about in my August 2023 newsletter. FactSet sells financial data to investors. Both are high quality companies with growing dividends, so I started a position in Equifax and added a share of FactSet.
Bought 1 IESC at $193.60
Bought 8 MLI at $79.67
I added a few more shares of IES Holdings and Mueller Industries at lower prices.
Bought 5 CAVA at $100.70
CAVA is a fast-growing Mediterranean restaurant chain, a bit like Chipotle. I started a small position.
Bought 20 GTLB at $61.60
Bought 3 MDB at $267.36
GitLab and MongoDB make software for computer programmers. Both stocks had gone down a lot, and I started small positions.
Sells -
Sold 5 MRVL at $102.67
I sold a few more shares of Marvell, which has gone down from its high in January.
Buys and Sells -
Bought 15 ELF at $90.79
Sold 20 ELF at $71.66
On February 6th, e.l.f. Beauty lowered its forecast for the year because its sales slowed down, and the stock fell about 23% the next day. I sold all of my shares for a loss of about 24%. This was a hard lesson, because I added more shares right before the report.
Bought 3 SAIC at $99.73
Sold 14 SAIC at $100.16
SAIC kept falling because of the worries about government spending. I sold most of my shares for a loss of about 11%.
Bought 40 CELH at $25.82
Sold 40 CELH at $30.11
Celsius makes energy drinks. On February 20th, it reported better than expected results and announced it would buy another drink brand called Alani Nu. The stock jumped, and I sold my shares the same week for a profit of about 17%.
Bought 57 FROG at $36.35
Sold 57 FROG at $40.98
Bought 10 SNOW at $169.38
Sold 10 SNOW at $184.70
JFrog and Snowflake both reported strong earnings, and I sold both for quick profits of about 13% and 9%.
Bought 25 NBIS at $48.12
Sold 25 NBIS at $34.21
Nebius rents out computers with Nvidia chips to companies building AI. Near the end of the month, a report said that Microsoft had canceled some of its data center leases, which made investors worry about AI spending, and AI stocks fell. I sold my Nebius shares for a loss of about 29%.
Bought 21 ALSN at $107.55
Sold 19 ALSN at $100.99
Bought 5 CBOE at $211.00
Sold 5 CBOE at $209.75
Allison Transmission makes transmissions for trucks and buses, and Cboe runs stock and options exchanges. I traded both, and sold them for small losses.
This month I made a lot more short-term trades than I usually do. Some worked out and some did not, and overall I lost money on them. I want to go back to focusing on long-term investments in high quality companies.
Thanks for reading my newsletter!