Investing Quotes

As I was thinking about the stock markets in the last few weeks, a few good quotes come to my mind:

"You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch

"The single greatest edge an investor can have is a long-term orientation." - Seth Klarman

"Prices fluctuate more than values—so therein lies opportunity." - Joel Greenblatt

"Remember that the stock market is a manic depressive." - Warren Buffett

"The four most dangerous words in investing are: 'this time it's different.'" - John Templeton

Preparing Our Portfolio For The Next Bear Market

The stock markets are in a mature bull phase, and I was thinking about how to improve our portfolio to adapt to this situation. I don't know when will come the next bear market, and I think that nobody can predict it. Because of it I can only do what I have influence on: change our portfolio to fit for an unpredictable future.

There are a lot of good shares, what we can buy at a reasonable price, but we try to choose those, that are working in non-cyclical industries. If I see two good opportunities I will choose for our portfolio the one that works in non-cyclical industry. The non-cyclical companies will perform better in the next economic recession, and we will have more reliable dividend income from them.

Because we have large positions in cyclical shares like Royal Dutch Shell (RDS.A), BHP Billiton and BMW we had to build sizable positions in non-cyclical companies. In June we bought the shares of Walgreens Boots Alliance (WBA) and CardinalHealth (CAH) companies. Now WBA is our second largest position. The shares of BHP Billiton and Royal Dutch Shell (which is our largest position) were bought during the oil price downturn in 2015-2016.

To streighten our portfolio we can buy consumer staples, what would be really great, but I think that the threat of Amazon created a good opportunity to buy healthcare related shares and they provide better valuation than the most consumer staples.

WBA and CAH are the members of David Fish's list. Cardinal Health increased it's dividend in the last 21 years and WBA is a dividend aristocrat, which increased it's dividend in the last 42 years. I believe, that both of them will be good investment for the next decades.

Disclosure: We have Royal Dutch Shell, BHP Billiton, BMW, Walgreens Boots Alliance and Cardinal Health shares.

Recent Sell - Macy's

I bought a few shares of Macy's at $19.02 seven months ago. At that time, the panic about the impact of the Amazon on the offline retailers was really high. Almost every financial newspapers write about it, and it was a good opportunity to buy an undervalued good company. I saw, that the company worth more, and it can easily pay out the dividends from it's FCF. I thought that I can collect my dividend payments until the market realize, that the company worth much more. So I had a great, 7.94% dividend yield, while I am waiting.

Yesterday I sold all of my shares at $39.79. It was a really good business for me, because I can double my initial investment. If I would not sell it, now I can collect 3.77% dividend yield. This yield is not so good for me for a fairly valued company. I think, that there are much better investment possibilities at todays market. I hope, that I can find some undervalued dividend growth stock in a few days.

Recent Sell & Buy – January – TEVA, Ventas, Gilead Sciences

I bought a few shares of TEVA in August 2017. I thought that the market overreacted the announced goodwill impairment, and it has a good valuation. As I saw the revenue and EPS decline, and the large restructuring, I felt that I can not predict the profit of the company for the next few years and I closed my long position at $21.41. It brings me a small profit for this few months.

(Source: www.finviz.com)

I bought Ventas (VTR) shares at $56.19 which means 5.52% dividend yield for me. I think that VTR is a great company, which increased it's dividend in the last 7 years and has not decreased it in 2008-2009.

(Source: www.finviz.com)

As I have more money after selling my TEVA shares, I bought a few shares of Gilead Sciences (GILD) at $80.74 which gives me 2.86% dividend yield (after the recently announced dividend increase).

  (Source: www.finviz.com)

Full disclosure: Long VTR, GILD

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