My Investing Journey with Passive Income, Stocks, and Cryptocurrencies!

Category: Recession Proof Page 1 of 6

BONDS at MAX BEARISH MOMENT

I’ve recently started adding more bond funds to my portfolio. I haven’t done this in about two years now.

This goes against what everyone is saying, it’s assumed both inflation and interest rates go higher from here. Many believe that since the interest rates are already so low, that the upside on bond funds is seriously capped.

However, a few things:

1)The FED is still buying over 80 billion Treasuries a month and has committed to doing this. This will drive interest rates down if it continues at the same pace. My prediction is the FED continues to buy more until it owns an even larger percentage of the Treasuries market (reducing supply).

2)The 10 year is at 1.45% as of today, it can still fall back under 1% and lower. Keep in mind the low last year was around 0.5% I believe people are wrongly discounting that this can’t happen from here.

3)Intermediate and Long-term Treasuries have a NEGATIVE correlation to the stock market. They offer protection and cushion to the OVERALL PORTFOLIO performance.


SO WHAT DID I DO?

I started a new position in TLT. As far as bonds go, this is of course the most risky move, as it is the long-term duration and most sensitive to interest rate rises. On the other hand, it’s the one that stands to earn the most if interest rates fall again. I believe they will.

Just a quick mention, I bought TLT back in December of 2018 and rode it for some INCREDIBLE gains all the way until the end of 2019. Remember this is where the FED tried to raise rates but it caused the market to correct and they were forced the other direction.

My prediction is that something similar will happen over the next year or rates will go LOWER from here. I have no way of knowing for sure, but I suspect some of the inflation we are currently seeing is transitory as the FED has said. Much of it is due to supply line issues, and in some cases, not enough workers available to do the job of getting all of the materials.

I’m also still adding to my VBILX position in my ROTH IRA. This is an intermediate bond fund I’ve had for about a year and half now. This is a much safer choice, although it has a yield of over 2%. This is because the quality of bonds it invests in is a bit lower. VBILX is pretty close to a “cash account” like a savings with minimum downside. To reiterate the risk here is the return gets eaten by inflation.

I will end by saying I don’t think bonds like TLT are something you buy and hold forever. I do strongly believe bonds have a place in anyone’s portfolio and I can’t see myself ever getting rid of them.

“You can’t time the market” is a saying commonly reiterated. Yet, by not holding bonds, one is timing the market. They are assuming the insane bull run of the last decade will continue, they are assume bond yields MUST rise. However, we are in uncharted territory as a nation with the FED expanding is balance sheet to unprecedented levels, with valuations of some stocks at insane levels, with demographics and political tensions we haven’t faced before. Who knows what will happen from here? I don’t. That is why I’m choosing to hold bonds regardless if most are speaking out against them.

My GROWTH stocks are destroying my DIVIDEND stocks!!

Here is my latest youtube video where I detail how my GROWTH stocks are killing my DIVIDEND stocks. How are your dividend stocks fairing in this Coronavirus Correction? I’ve had THREE Dividend cuts and that sure hasn’t helped things

My top performers continue to be Fortinet, Netflix, and General Mills.

I am up over 30% in each of these. I’m up almost 40% in Fortinet in a super short time (only 2 months!). General Mills I’m up in because I bought it starting Christmas Eve of 2018 and by the time I count the dividends I’ve gotten, my total return is over 40% on this stock. Netflix continues to outperform; I just hope that price appreciation continues.

In this video, I also detail why I am buying ITOT and QQQ over NOBL and DGRO. In summary, a basic Total Market ETF outperformed ETF’s that focused specifically on Dividends. Focusing on dividends led to increased risks and a weaker performance. One line often touted by Dividend investors is “Dividend Investing performs better during bear markets, it is safer.” However, what this correction is proving is that it is NOT necessarily safer. Currently over 33 companies have cut their dividend. Imagine relying on that dividend during retirement? Not good!

I am continuing to buy QQQ and ITOT a little bit each week. I also plan on increasing positions in Marten Transports, Chewy, Eaton Vance, and perhaps Mcgrath Rentcorp. I think these stocks still present incredible growth opportunities and I’m thinking LONG-TERM here.

As usual, I will repeat the old mantra, timing the market is difficult. I think there is nothing wrong with sitting on the sidelines for a bit, but I want to get that money working for me as quick as possible.

Did we hit Bottom? Why you shouldn’t care

One question I keep seeing all over the internet is was March 23rd the bottom? Well, that remains to be seen. Maybe, maybe not.

I am of the opinion that the market could keep going up and that COULD have been the bottom. At the same time, we could also go lower from here.

At the same time, I can’t say I care one way or the other. The majority of my investments are on a 5-20 year timeline. All that matters to me is that the prices we saw in January are not the highest we will EVER see again. I expect that we will get back to All-time highs and go higher after this is over. The pressure is building and when we hear good news, I fully expect the market will rally like never seen before. I won’t be surprised if a rally occurs faster than most people expect.

As long as the market is up higher than the current ATH during your investment horizon, you are getting dividends, reinvesting, making regular contributions, then the current market conditions are not something to worry about.


How is the Coronavirus itself looking?

We are now seeing a slowing of Coronavirus cases in Italy and Spain. Cases are increasing under 3% and deaths under 4%. This is reassuring. Who knows how long it will be until those economies open back up. However, we are seeing a move in a positive direction. Here in the states, we are still seeing an increase of 8.4% in cases and a whopping 18% increase in deaths today. We have a ways to go, especially here in Georgia, where I don’t believe we adequately prepared for this. Our governor is a bit of a disappointment.

I think life as we know it will probably change until the end of the year. Things will gradually open up but we will all be cautious of going to a crowded concert or restaurant again. Who wouldn’t be???

I have largely been staying in, only to go out for mail/groceries and a rare walk (most places are closed). My fear is not the illness itself but perhaps the medical bills that come with it. My greater fear is having it, not knowing it and giving it to my elderly mother who is an extremely high-risk case here. These are the things that linger at the back of our minds as we face this. My wife’s job has been TERRIBLY affected because she is a full-time musician who depends on gigs for a living. Imagine all of your work gone in a blink of an eye. Myself, I am lucky that I do mostly online teaching anyways and my business has even increased due to the virus.

I fear what will happen to the country during this downturn. So many small businesses could go under here. I see LOTS of businesses over leveraged, borrowing more so they will be “prepared” if this goes on longer.


Anyways, what moves have I made this week with my buying and selling?

1)I keep buying Stanley Black & Decker. I am up an incredible 42% in one tranche I bought, not even that long ago. Of course, I keep buying, so overall I’m up something around 18% in the stock. Nice Dividend Aristocrat and solid company LONG-TERM

2)I am taking nibbles at ITOT every couple of days. I am NOT trying to time the bottom here. I am sticking to my plan of buying anywhere near 2400 and under. I am also buying smaller portions at 2600. I think these are decent entry points long-term.

3)I am gobbling up QQQ on any dips. I think this is a SUPERB ETF to be in. It is less exposed to things like restaurants, hotels, and cruise lines. It is tech-heavy, but I am fine being tech-heavy during these times.

4)I bought Lowes for a SWING TRADE. I only made around $24 bucks off of it but I only held it like three days. I continue to play either Home Depot or Lowes for weekly Swing trades. I like these stocks for swing trades, because I am fine holding either long-term if I can’t get out of my trade quickly for a profit. I made around 8.4% off of this trade. Last week, I traded Home Depot in my IRA account for even a greater profit. I think THIS is the type of market to swing trade-in. You will see tremendous volatility, swings of 8-10% in one day. Why not take advantage of it to go with your long-term investing??

5)I am still playing the TRUCKING SECTOR as I feel these stocks were already beaten down prior to the crash and are holding up well. Marten Transports is one that continues to perform well. So far, up over 8% in the stock over the course of a few days.


As always, here is the YOUTUBE video discussing Some of this:

What am I buying?

1)Universal Forest Products is a new position I started, it is a small-cap company in the lumber, backyard equipment, gardening supplies area. They also supply materials for Construction as well

2)Chewy– I’m still taking Nibbles at CHEWY :)….a few shares here and there. My wife and I use Chewy for our two cats (Sid and Ellie) and we love the service. At this point, I consider this a speculative bet though.

3)Mcgrath Rentcorp-I was FINALLY able to buy shares of this company at a reasonable price. The books look great and it is well managed. Another small-cap stock.

4)Still buying Stanley Black & Decker

5)Schneider Trucking and Marten Transports-You MAY be thinking, didn’t this guy just sell SNDR? I did, but I kept a small portion of my shares and at these prices, I think TRUCKING STOCKS present an incredible bargain. They were already priced for a recession and have held up pretty well during the Corona Crash.

6)Taking small nibbles at ITOT and QQQ every few days. I know we can’t time the bottom so I am just buying around 2400 and under mark on the S&P 500. These are great index ETF’s that I want to hold until retirement.

7)Hooker Furniture Company-another small-cap I’ve been holding almost two years. This presents me with a great opportunity to lower my cost basis considerably. I am down around 40% in this stock, luckily it’s not a huge position but I believe in the company long-term, if it can get past the Tariff stuff (and now the virus!)

8)Lowe’s-I had recently bought Home Depot to swing trade and here I am with Lowe’s this time for another swing trade. I am up 3.5% after one day so far, I play on getting out around 5-6% unless it just blasts up and then I will, of course, hold longer.

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