Shopping Day : )

“The real key to making money in stocks is not to get scared out of them.”

― Peter Lynch

The Portfolio

Today I took advantage of the market sell off to buy some great companies at reduced prices. I also sold some bank stocks, it's possible we won't see these appreciate anymore as the potential for a rate cut is pretty high. In fact we may see a couple of rate cuts; at least that's what the bond market is telling us today. Please don't restart worrying about the inverted yield curve.

CVS is one of my favorite stocks for a long term hold. Everything CVS is doing is designed to benefit from all the changes taking place in US healthcare and will benefit everyone in ways not yet imagined. While I sold a couple of our regional bank stocks, I bought MasterCard to keep a position in financials. With interest rates low I like the payment processing companies (Visa, MasterCard, PayPal & Square) better than banks. American States Water is a new position today and I bought a larger position than I might otherwise buy. I'm very bullish on AWR and expect to add to the position if it drops 5-10% below our cost basis of $72.65. Utilities tend to trade in step with each other, so I have hope that we'll see AWR lower.

The Portfolio closed today up +11.51% YTD. The S&P500 is up +11.02% YTD.

Today's Sales:

Sold 17 shares of FIBK @ $38.21

Sold 9 shares of INDB @ $73.10

Today's Buys:

BUY 38 shares of CVS @ $52.60

BUY 10 shares of MA @ $252

BUY 25 shares of AWR @ 72.65

I'm Still Bullish

Look, there's a lot to worry about...there's always a lot to worry about, but that doesn't mean we can't find good places to put money to work. We still have about $50,000 to put to work, but I've held off as the bond market keeps signaling that we might get deeper discounts if we're patient. Iran, North Korea, Brexit, The Mueller Report, Impeachment, China trade, Tech War, disruption in shipping, and much more are all vying for our attention and fear. But there's a lot to be excited about too. The US consumer is confident and spending. Unemployment is very low and companies are still hiring. Capital investment is still ramping up from the tax cuts and overseas cash repatriation. 10 year Treasuries are low, but pay more than bonds from other developed countries.

The Trade War, as I stated in earlier posts is really a Tech War. I don't see a trade deal coming anytime soon. In fact I'll walk out on a thin limb and say, I don't think a trade deal is coming, and I don't think China has any intention of ever allowing US companies to establish themselves in China. A few companies that have little impact on China's economy (aka Starbucks, KFC, etc) will do okay, until they get too big. As investors we have to hold two positions in our thinking,

1) A Trade Deal is coming - how do we invest around that theme?

2) A Trade Deal is not coming - how do we invest around that theme?

How To Invest

If a trade deal materializes I'd want to own industrial stocks like Caterpillar, United Technologies, Boeing, and Technology stocks like Nvidia, Xilinx, AMD, Analog Devices, Qualcomm, Apple, Micron, Marvel, Silicon Labs and many more.

If a trade deal doesn't materialize I want to own healthcare, a power house utility like AWR, Gold in the GLD and companies that have little correlation to the broad stock market that rely on revenues from the US and Europe. I probably still want to own Nvidia and hold it forever. I'm currently betting on the later strategy and plan to allocate more money towards healthcare (biotech, big pharma, insurance companies).

With interest rates dropping like a rock I would also be looking at best of breed home builders and Home Depot. Companies like Pulte Group PHM, William Lyons Homes WLH, and Toll Brothers TOL.

"Markets don't go to zero, Portfolio's do.

Buy quality, be patient...and use sun screen"

- Clay Baker

Stay Invested,

Clay

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Keep Me Honest

  1. S&P 500 declines to 2,350 or more (1-3-2019)

  2. Healthcare and Biotech sectors outperform (1-3-2019)

  3. S&P reaches 3,000 by year end (1-11-2019)

  4. CSCO reaches $60/share (1-18-2019)

  5. VEEV reaches $145/share (2-14-2019) (achieved $145.23 on 5-10-2019)

  6. CVS reaches $91.50 (2-27-2019)

  7. Bull market takes another leg up (4-7-2019)

  8. The Fed will lower rates 1-2 times (5-13-2019)

Clay's Rules

Rule #1: Don't lose money

Rule #2: See Rule #1

Rule #3: Portfolios go to zero, markets don't

Rule #4: When a good stock you own drops 10% below your cost basis, add shares

Rule #5: Bull markets aren't sustained without the Transports

Disclosure: I am personally invested long in some or all of these stocks or funds that appear in the Stay Invested portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the Stay Invested portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. I am invested long in these securities mentioned in this post:

CVS, CSCO, VEEV, STZ, AMZN, NVDA, BCRX, GS, BDSI, VEEV, VTI, GLD, HD, AWR, XLNX, MRVL

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