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The week that was:
In last week's newsletter, I had mentioned selling out of a lot of positions to raise cash. I will explain the reasoning.
I have two kinds of stocks in my portfolio.
1) Stocks that are long term investments
These are blue-chip companies that I have bought at a good price. I intend to own these stocks for several years. Starbucks(SBUX) and Nike(NKE) are examples of investments in my portfolio.
2) Stocks that are shorter term trades
These are good companies that I was able to buy at a cheap price. But I don't have the confidence that they will do well in the long-term. Trades are usually bought in the midst of a bull market, when the best companies are usually overvalued. Splunk(SPLK) is an example of a trade in my portfolio.
I sold most of my trades because the stocks were too risky to own in this market environment. I did not sell any of my long term investments, but I sold stocks like Roblox(RBLX) and Dutch Bros(BROS) which I consider future investments.
Roblox and Dutch Bros are still relatively new companies, and their valuations have not settled yet. I also expect them to go down even lower, so I sold them to raise cash. Once their valuations settle, and their share prices are at attractive levels, I will buy them again as investments.
It turned out to be a good decision. I mentioned selling Roblox at $68 and Affirm at $58. After reporting poor results, Roblox is now trading at $49 and Affirm at $37. Whew!
Sells -
Splunk: Sold entire position at $125.40
Splunk was a trade in my portfolio. When the news about Cisco buying Splunk came out, the stock price shot up, and I took the opportunity to get rid of my position.
Buys -
Unilever: Bought 2 at $51.25
Because of the current volatile environment in the stock market, I am trying to own defensive, safe stocks like Unilever. UL grows slower than a tortoise walks, but the company is profitable, and they pay a good dividend. Recession or not, people will always need Unilever's products.
Aerojet Rocketdyne: Bought 15 at $36.93
AJRD is a company that makes engines for rockets and missiles. The engine is the most important and complex part of a rocket and AJRD is the leader. Defense stocks do well when there are tensions between countries. Lockheed Martin announced this week that they will not buy AJRD. The stock price went down and I took the opportunity to add to my existing position.
What I am watching out next week:
There may be a panic attack in the market due to many negative events. People may start selling all their stocks and prices may crash. That may give me a great opportunity to buy stocks as people sell. Now I have cash available if it happens.
Stocks such as Disney(DIS) and Ross Stores(ROST) are reaching attractive prices. I am watching them, and I will buy them when they reach reasonable prices. Facebook(FB) and PayPal(PYPL) are also nearing good prices.
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