Are You Prepared?

“Always carry a flagon of whiskey in case of snakebite

and furthermore always carry a small snake."

- W.C. Fields

​​The Portfolio

The portfolio is UP +0.48% YTD as I'm writing this post.

Our benchmark index, the S&P 500 is down -12.38% YTD.

Do Something!

My longest term readers have come to understand that when I'm not writing I'm either busy doing something important, like an oil change on a vintage motorcycle, taking a walk with my fiancé or thinking longer term about this portfolio. With respect to stock portfolios, sometimes the best action is to do nothing. That doesn't mean ignore your holdings, just the opposite. In times like this it's more important than ever to know what you own and why. Bad news should not mean sell, and good news should not mean buy. We buy stocks when the price is attractively low and the business opportunity is bright. We sell stocks when our thesis breaks down and the future is not looking so bright or when the price is overly rich and we have an opportunity to take some profits.

Be Prepared To Do Something

The quote above from W.C. Fields is a reminder to be prepared. When investing in stocks that means having a shopping list of companies you like and writing down the buy and sell prices where you would like to make an entry or add to an existing position. Selling is either an exit from 100% of the position or some trimming to capture profits but keeping a smaller position to stay in the stock with less risk. Knowing where your cost basis is relative to the 52 week low and 52 week high can be a helpful perspective. Also, knowing when a stock price is 10% or more below your cost can be very helpful, because that's a good time to look hard at that company again and make sure the thesis is still in tact. If a good company is selling at 10% or more below your cost basis, that's probably a good time to add to your position; as long as you don't already own enough or too much of that company, and the upside potential warrants the investment.

What's The Stay Invested Portfolio Done

I think it's reasonable for my readers to ask me, "What have you done for me lately"?

The Stay Invested Portfolio first and foremost provides the average investor an opportunity to own a group of individual stocks, along with a low cost index fund and some gold. An investor in this portfolio doesn't need to do the original research to build the portfolio and figure out the allocations, but should certainly do their own follow up research to make sure they agree with the selections.

The second advantage of the Stay Invested Portfolio is that most people who fall into the category of 'average investor' really don't have the time that's required to keep up with earnings calls and all the latest developments for upwards of 30 securities. Following the blog provides the executive overview, buying and selling actions, along with some thinking about what's going on in the market as a whole.

I'm not always right. However, if you're a person who gets the financial news and economic news in sporadic headlines, sound bites and tweets, you may find my perspective instructive. Frankly anyone who follows many sources of news and provides a synopsis that's easy to digest and isn't laden with ideological overtones, is probably a better source of information than those sporadic sound bites.

Capital preservation and growth...that's what the portfolio has done. We are in the early stages of the most unusual economic down turn of our lives and the Stay Invested Portfolio has managed to do two very important things, preserve your wealth and grow it. I might say there's been a third advantage; the roller coaster ride has been a little gentler than it's been for someone who just invested in an index fund.

Below is a chart of the Stay Invested Portfolio compared to the S&P 500 from December 2018 through April 2020. Even though the portfolio includes a total stock market index fund, it remains a little less correlated with the overall stock market. The S&P 500 has a beta of 1.0, our portfolio tends to have a beta right around 0.80.

Coming Up

In a future post I'm planning to cover each stock, describing why we own it and what I think might be the catalysts that would keep them growing, or why I might sell some or all of a position.

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

Buy quality, be patient...and look twice for motorcycles."

- Clay Baker

Stay Invested,

Clay Baker