Day 87: Get a grip investors!


The Mother's Little Helper portfolio was up today (+0.45%) for a gain of +$2,802.68. Overall gain to date: +$23,904.54 (+3.99%). 68 stocks are now in the black, 54 are still in the red.

After a nice rally this morning I emerged from the shower to find the market losing steam and ending the day with a flat line heart beat. Today was the quintessential flat liner. I have come out of the shower to find the market in disarray so many times that I've seriously considered avoiding showers until investors start behaving rationally. There was nothing about today's news that made any sense with respect to selling or buying. I want to share this with you. This is what Charles Schwab posted today after the close.

"After being modestly higher for most of the day amid cautious optimism over this evening's vote on a widely-watched healthcare bill, U.S. equities lost steam late to finish near the flatline after reports surfaced that the vote would not happen today amid continued political wrangling." - ©2017 Charles Schwab & Co., Inc. All rights reserved

Let's try to wrap our heads around this one. Investors in mass, decided independently but as a collective to first buy strong into the morning, pushing the DOW up about +60 points because they thought that a vote on a new healthcare bill would get voted on. Then after hearing that the vote wouldn't occur tonight, sold off dragging the market back down to -4.72. This is exactly why following short term events and trading in and out of stocks is such a horrible strategy. No one can predict this kind of behavior. Sure, there's a hundred things out there that could be effected by a new healthcare bill. But not one darn thing is effected by a possible vote, for a bill we haven't read, with an unknown 50-50 outcome. Companies continue to operate and do all the things that companies and their employees do, create value and grow their business. Unless your Sears, but that's another story.

I think that investors just figured out that they have over priced stocks on an assumption that President Trump would get everything he wants; and become the first President in U.S. history to actually deliver on every campaign promise. Kind of a tall order. How about we all get back to selecting and holding investments on all those crazy notions like earnings, profitability, growth and value.

I am expecting to see the merger between DuPont and Dow Chemical get approved, hopefully next week. The merger will be good for both companies and provide a nice boost to our portfolio. I'm also watching Citrix Systems closely. I've been happy with the +80% return to date, but there appears to be buyout rumors on the street. Citrix still has lots of room to run, so buyout or not I'd continue to be a long term holder as the company is still highly undervalued.

I've received some great email regarding what I should do about the miscalculation in the portfolio (see yesterdays post). Please write in the blog vs. emailing me. As I stated, if this were a real money portfolio, the stop loss settings on each investment would have sold off the stocks that were added erroneously when they dipped below a set percentage. The losses would be smaller and more money would have been allocated to the stocks that are ahead today. Some of you say leave it alone, some say fix it. I'm inclined to leave it alone for a little while longer until more of you voice an opinion. Just to put this in perspective, the portfolio would be showing a 20% or more overall gain if the error didn't occur.

Amidst all the running around today the MLH Portfolio sat quiet and earned another 0.45%.

Stay Invested,

Clay Baker

Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell share withing the next 72 hours. I am also invested in other stocks that do not appear in the MLH portfolio: BA, BRK.B, CELG, CSCO, CTXS, CVX, DOW, DVAX, FB, IBM, NTES, NVDA, OMER, PFE, PG, RDHL, SCHW, THO, TWX, VEEV, VZ, XLNX, XOM

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.

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This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice.
This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.

© 2016 by Clay Baker all rights reserved