I may trim a few positions…
It was a good day in the markets, Toll brothers was up 4.4%. Bank of America which I hold and have discussed but which is not in the list above was up 5.7%. Here in Canada, Boston Pizza which I bought for yield and not gains was up 1.7%. And Walgreen was up 2.7%.
My Portfolio…
The composition of my own portfolio was very recently updated. It shows that I am over 97% invested in equities and less than 3% in cash. And actually a little bit of money if borrowed outside of my investment accounts and so my net equity position is actually a bit over 100%.
By most any standards my portfolio is very aggressive. On top of the high equity exposure, I am concentrated in not very many stocks. So in that regard I am living dangerously.
So… from an asset allocation or risk management perspective it makes sense for me to trim my equity exposure and trim my exposure to certain companies.
But… I have trouble doing that because all my larger positions are stocks that I rate highly. So I am conflicted about selling a highly rated company.
However, I know that logically asset allocation and risk management should come first and logically i should trim some positions.
And recall that I added to Melcor and other positions as their prices dropped and so it makes perfect sense to reverse that as the price rises.
So… I did sell what amounted to 16% of my Melcor shares today (at $13.65).
I also have a previously disclosed order in to sell a bit more Wells Fargo at $30.40. This will sell only about 4% of my Wells Fargo.
My thinking is to enter a few more Sell order and trim some positions. Ideally I would trim while prices rise in the next few weeks, but certainly that may not be the case.
I really should trim fairly aggressively right now but I am inclined to go more slowly and see where we stand after the Q4 results come in. For example I am hopeful for good results from Canadian Tire in particular. And probably Wells Fargo, although for Wells Fargo the real catalyst I hope for is a dividend increase.
This risk if I don’t trim positions we get a leg down in the markets due to Europe or Iran and I won’t have money to take advantage of lower prices.
Adding to my risk is the fact that my portfolio has grown quite nicely and I have been investing for some 23 years now and I am at the point where new contributions from savings will not save the day if the market falls. Younger investors are in a better position to ride out don-turns since their new contributions from savings are material realtive to their portfolios (no longer necessarily the case for me).
Hopefully that is not too confusing. If it is, well, it is also honest and when we are being honest every investor must admit they have conflicting thoughts about the market. We all struggle with the extent to which greed or fear is going to guide our investment decisions at any point in time. My asset allocation and portfolio composition indicates I have been rather brave — but that does not mean I don’t have my moments of fear or at least moments of thinking I should lower my risks.
Having said all this, I do feel good about the markets right now. And, having said that, anything can happen at anytime. It’s the nature of the beast.