What should I do with my portfolio with this market? Will Ukraine, inflation, rising interest rates and other pressures make stocks go down even more?
Long story short — nobody knows. But here’s where I lay out my portfolio thesis and how I structure my own investments. There are opportunities in the market as I discuss below in the $XLE, but I do stick to the 40–40–10–10 rule that I have developed for myself. The key point is to create a plan and then stick to it. Here’s my plan.
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40% of my portfolio — buy and hold — hold these for a very long time (over 1 year). You can add or subtract companies from this group and you should take profits from time to time (I have yet to sell a share of $AAPL since 2006, but I should have). Examples for me — $AAPL $MSFT $GOOGL. I do have $TSLA in this group, but that’s an example of a company that could go in and out of this group.
40% — long term, but rebalance every 6–12 months. Dividend stocks and some of the other long term areas that are not subject to very large fluctuations. Examples of this are $KO and $PEP for me. Others included in this are energy stocks for this past year like $MPLX and $XOM. I also have many of my ETF’s in this like $XLK $XLY. The ARK funds were in this, but they have moved to the next 10% realm based on the 12 month performance of them.
10% — short term — 0–6 months. These are companies that you have a conviction that things are good, but long term there may be volatility that isn’t worth holding past a few earnings quarters. A company like $FB for me is in this group since I found myself using social media less and less. $TWTR is also in this as much as I use it the most for social media, they just haven’t been good at monetizing it. $CRM is in this group because of their valuation.
10% — day trading and swing trades. The perfect example of this is crypto related stocks or actual coins. The volatility for me makes it an easy way to get in and out to grow your short term profits.
There are some great opportunities today, but nibble. I don’t think it’s worth going big on your buys even with all of the discounts we’re seeing today.
Here’s a weekly chart of the $XLE going back to 2010. You can see the highs back in June 2014 at $100. We are currently selling at $67 so if oil prices are going to continue to rise the way they are, you still have 30% upside.
Here’s a weekly chart of $AAPL going back to 2010. Do you see the crash of 2022 in here yet? The answer is NO.
Here’s a weekly chart of $MSFT and you can see every time it pierces the 50 day SMA (blue line), it’s bounced back.
Here’s a weekly chart of $GOOGL since 2011 and it continues the theme of bouncing off that 50 day and continuing a trend upward.
My point being — develop a plan, organize your portfolio and stick to the plan. Rebalancing is part of making sure you have a solid plan going forward. Don’t you dare think going to cash is going to keep you safe. Inflation at 11% means you’re losing money there too.
