STOCK PORTFOLIO UPDATE - AUGUST!
BYE BYE JULY! Supposedly May-September is historically the weakest period for stocks... I'll certainly vouch for that this year! We're over the hump though and steadily approaching the statistically more profitable Q4 which for me personally has brought a huge average of +12% gains over that 3 month period. This is also the quarter in which 3 of my top 4 biggest months (ranging from 18-34%) have occurred!
As much as it pays to be positive, you must reflect back when things go wrong and analyse in order to learn and make changes! So after a big Q1 and an evenly balanced Q2, this quarter has got off to a slow start... Why is that?
Well firstly, the clear rotation out of growth stocks and into value names back in February of this year is still in play! A rotation occurs after too many investors pile into the same areas of the market causing other areas to become extremely undervalued.
Imagine a ship where everybody is running to one side. This creates an unbalance and at some point, the boat could flip over unless people started returning to the other side! Ideally people would just pick a seat and sit there... Perhaps moving every once and a while when a particularly good seat became available... However! this is the stock market and most people can't help but run around like headless chickens chasing every seat in the sun!
If you're new to investing then rest assured that these rotations are completely normal and have occurred each of the last 4 years (Oct 2018, Jul 2019, Feb 2020, Present). Chasing the market is not part of my strategy because you'll always have a huge disadvantage in this race versus the hedgefunds and investment banks that take you for a ride!
As soon as the impatient have been lured out of their positions, the weak hands have been shaken out and the greedy have been forced to close (due to stoplosses, leverage etc.), the big players will snatch those shares out of your hands and move straight into your spot! Therefore, knowing that everybody will come back to the most exciting growth industries soon, I am happy to pitch a tent - In fact build a house around the heavily researched, market leading growth stocks that I own shares in!
The second thing that's dragged us back this month has been our exposure to the unpredictable Chinese sector. If you didn't hear, Chinese tech stocks had their worst month since the financial crisis as the Chinese government began cracking down on local tech companies as part of a giant overhaul to "improve" anti-competitive behaviours, data handling and national security.
It's not fun when some of your investments are going through storms like this but I have looked at the Chinese stocks in my portfolio and I'm confident in the fundamentals and long-term growth potential of these companies. That said, I have re-evaluated the risk associated with these stocks and I'll be considering this when making changes to my portfolio after the bounce!
Similar to last month I have made no changes to the portfolio... The cash that I had on the sidelines has now been put to work in some very undervalued and exciting stocks and I genuinely feel like some of the investments in my portfolio are like tightly coiled springs ready to explode higher. To those who are sitting through the rain with me, rest assured that we have been here before many times and sitting through boring stock market / crypto winters is just part of the plan... The party will certainly start again don't you worry!
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𝗗𝗜𝗦𝗖𝗟𝗔𝗜𝗠𝗘𝗥: All trading involves risk. Only invest money that you can afford to lose and remember that past performance doesn’t necessarily guarantee future results. Everything posted by me is for educational purposes only. I am not a financial advisor and no information in these videos or on my website should be considered as financial advice.