Even in this shaky stock market, I regularly contribute to 401K, ROTH IRA and my taxable mutual fund acconut. However, I haven’t had any money to invest in stocks for the last few months. Early this week I received and sold my company’s stocks under the Employee Stock Purchase Plan (ESPP). By the way, if your company offers ESPP, it’s a mistake not to participate to the maximum percentage allowed. However, I do not like the idea of holding those stocks for long, so I sold them right away. I should probably have saved that money in a saving account, but I decided to enter the market again. Here’s what I did.
If you read my previous post, I mentioned two stocks that I thought were good. With money now available in my account, I bought 40 stocks of NUE right away at $37.50. I should have waited a day, or at least few more hours, because as I am writing this post, NUE is trading at $33.22 (down 11.5%). Next, I bought 10 SPDR S&P 500 ETF (SPY) for $96.90 (it is down 4.45% right now at $92.59). This is my first ETF purchase, and eventually I want to build a diversified portfolio of index ETFs rather than having everything in mutual funds. I’ll write about benifits of ETFs in some other post. With whatever was left, I bought 16 BHI at $32.20. BHI hasn’t had a chance to go down yet, since it was purchased just a while ago!
I spent all the money I had. I should have saved some cash. That is what I say everytime, but I am not that deciplined yet. People say you should keep at least 10% of your portfolio in cash, so that if there’s more buying oppurtunity, you have funds to buy them. But whenever I have money, I get excited and spend it all. I hope all this leads into more money in the future! As of right now, I am down 7.77% in just two days. It’s ok because I made close to 40% on the company’s stocks that I sold!
2 Comments until now.
Nue is excellent, and i also like X, I am surprised that in your screen of potential 6000 stocks, only nue meets graham’s criteria. What are the criteria?
About Nue, it’s also the top holding of CGMFX managed by superstar ken Heebner for this year, but i guess he has trimmed it a lot. CGMFX is the best performing mutual that i can find so far for the past ten years. It outforms S&P by 2.8X and at the high last yr, it was 4.8X (not so good this yr as he is loaded with commodity stocks). If you can find another one that is better, let me know. With that said, ken heebner must have his reasons for owning nue, and he has done the homework for us.
http://quicktake.morningstar.com/FundNet/Holdings.aspx?Country=USA&Symbol=CGMFX
BHI and Nue are both great, but it’s likely to go down a little more with the market, but for the long run, they are great. SPY is always good for any investor, but take a look at IWM (russel 2000). Typically, after recession, small caps perform better.
Bob, Yeah I looked at X also and it looks pretty good. Only reason it didn’t make the cut was that it’s current ratio is not at least 2. The screen was based on the 7 points mentioned on the previous blog, although I didn’t screen all. You are right, after recession small caps generally perform better, but I was thinking about waiting to buy small cap until the market goes further down.
Comment!