At the end of 2017, I was doing some last minute rebalancing of my retirement accounts. The stock market has been going crazy. By “the stock market”, I mean something different than what you are probably thinking.
The United States stock markets did really well in 2017. Depending on the index, they went up 20% or so. However, Personal Capital seemed to show those markets up 28% for the year.
To quote the Lego movie, everything is awesome. However, things were so awesome that my portfolio needed some minor adjusting. Another good reason to do trades at this time of year is that my stock ETFs paid their dividends. Why not put those dollars to work?
During the process, I decided it was time to invest in a new stock. I had been toying with the idea of investing in it for a couple of weeks. However, I was already logged in and making trades, so what’s one more?
As you may be able to tell from the article’s title, I invested in General Electric. Hopefully, I’m not showing my age too much with the title.
I was fortunate to get a price of $17.4647. (To really show my age, I remember when stock prices were traded in fractions. Now they are trading at four decimal places?)
I wish I could say that I had some great insight into why I bought GE. I can say that I read this Seeking Alpha article
and this one
and this one. There was a lot of compelling information there. Perhaps the most compelling reason was that GE was trading at it’s lowest point in years. There’s certainly some good reason for that, and those Seeking Alpha cover them in better detail than I can.
GE feels like a stock that I could buy and hold for years and years.
It’s been less than two weeks and I’m already wondering if I should sell it. I’m mostly joking, but it’s gone up 9%. If only one could make 9% returns every two weeks, right?
If you read my post about my clicked to look at the spreadsheet, you’ll notice that I have %high and %low in the watchlist tab. That’s so I can see how close a stock is to trading at its 52-week high and how close it is to its 52-week low. I don’t suggest that anyone use these exclusively when picking stocks, but I’ve found them helpful when I’m looking for a bargain stock.
My original plan was to hold GE for a quarter or two to assess how the turnaround of the business is going. My hope is that it has a chance to get to $24 which would be halfway to it’s former high. At around that point, I’d use what new information I have consider whether I should take the profit and move on, or just hold onto it forever.
I’m with you on the vulture thing, but I think it’s safer to spread your bet across several names– in different sectors if possible. Nothing against GE but that’s still a concentration risk.
I agree it’s mostly froth and high valuations these days, but there are some depressed corners such as retail, energy production, shipping, healthcare, and agricultural commodities that hopefully can rebound over the next few years. Examples in each category would be CBL, DWSN, NM, QHC, WEAT. I don’t hold any positions in these five names but I do in some of their competitors.
No guarantee that this basket will work better than doubling up on a rocketing crypto bet, but it’s usually a good idea to rebalance, and this typically involves moving money from winners to losers.
I’ll be writing more about my portfolio in the future. The individual stocks that I invest in are around 10% of our total portfolio. Most of them are pretty large like GE.
Some names are IBM, Alibaba, WalMart, WalMart, Google, Apple. Obviously, not all of them seem like vulture, but a good number are. I’m going to be a little more verbose about this than I normally would in a comment as I can use it for that future article.
The Google purchase is probably 10+ years old now. I viewed it as investing in the internet. I didn’t buy it at a vulture price. I feel it is almost like a small mutual fund of various businesses.
The Apple stock was bought around 3-4 year ago on a big dip. I think the activist investors were calling for a dividend and people were concerned about their future being tied to one product that was losing ground to Google’s Android.
I bought WalMart after a big earnings miss on October 15, 2015. I paid $59.8699 a share (again an unnecessary four digits of decimal places). That was a complete vulture trade.
I bought Alibaba on 8/12/15 at $72 when they missed earnings and sold off.
This makes me sound like Nostradamus, but I have a number of misses as well. I mentioned IBM. I like the P/E and dividend, but there’s not much growth as they turn around the business. I have also invested in oil (via USO) which is about future contracts and contango/backwardation that I didn’t realize. I’ve dollar cost averaged a lot with it and after a couple years I’m finally doing better than break even. I had a similar situation with Twitter. After years, it seems the value in the platform is finally being recognized/unlocked and analysts see it growing quite a bit.
From most of the articles I’ve been reading, it looks like GE will be at their lows for quite a while. Until maybe it can spin off the GE Capital, which seem to be one of the more distressing portions of the company – I can’t see much upside for the time being. Oil and gas slow down isn’t helping the current situation either.
I myself went in awhile back and is still kicking myself for getting in too early. The illusion of stability and potential dividend returns clouded a bit of my judgement. There’s no point selling at all time lows right now. Just have to wait and see how it will turn around.
Yeah, I might have jumped the gun with GE. I also got a little excited that it immediately went up. I think I will dollar cost average at certain points. I think the long-term prospects are good once they reorganize a few things and I’m in it for the long haul.
That said, I’m also on year 3 of holding IBM and that’s been a long turnaround as well.