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The stock market pulled back after a Santa Claus rally. The Omicron virus is spreading fast and interest rates are rising. As a young investor, it is better to have more growth stocks in your portfolio. However, it is important to own a few defensive stocks to protect your portfolio from a market decline.
Defensive stocks are companies with low growth and growing dividends. The prices of defensive stocks usually do not increase or decrease too much. That protects your portfolio during a market decline. An example of a defensive stock is Merck, a pharmaceutical company. Merck pays a growing dividend at 3.60%. Medicines are necessary even when the market is not doing well.
I made a few changes this week.
Sells -
Global Payments: Sold entire position of 6 shares at $153.08. Global Payments is a company that helps other companies process payments. It is a good company but has competition from PayPal and Square. Due to the high competition, Global Payments is less profitable. I made the mistake of buying too many shares of Global Payments too soon. When the stock price went down, I could not buy any more shares because I already spent too much money on it initially. This week, the price of Global Payments rose and reached a similar price I bought it at. Because of that, I sold all my shares of Global Payments so I can use the money to buy other stocks.
Buys -
Roblox: Bought 2 shares at $88.89. Roblox is one of my favorite stocks for 2022. I like the stock because it has high growth. It is popular and an important part of the metaverse. More than half of the kids under 16 play Roblox in the USA (But not me. I prefer to buy the stock than to play the game!). I try to take every opportunity to buy a few shares of Roblox when the market declines.
Twitter: Bought 10 shares at $39.74. This week I started a new position in Twitter. Twitter is a company with high growth and good management. Twitter is constantly innovating and improving their products. Jack Dorsey used to be the CEO of Twitter. However, he was also the CEO of Square, so he did not focus too much on Twitter which caused the company to be neglected. Now Twitter has a new CEO who can fully focus on Twitter. Lately, Twitter has also started to become a more profitable company.
Sentinel One: Bought 1 share at $44.30. Sentinel One is a cybersecurity company. Sentinel One is a fast growing long term stock. Cybersecurity will be very important in the present and future because of the heavy use of technology in the world. I only bought one share of Sentinel One because I expect the stock price to go down and I learnt my lesson from Global Payments to not buy too many shares too soon.
Thank you for taking your time to read my newsletter. I will be back with more interesting news and changes next week!