Latest Positions and a Trade Alert: Locking in more profits
We have a lot of stocks up big today, which has been a recurring theme for our portfolio during earnings season so far. Many of our biggest positions are at or near all-time highs. If you haven’t done any trimming, consider doing so. Maybe 10-20% of some of these biggest winners or about that same amount of some of your most recent big winners.
It’s easy to get carried away in the momentum and to start feeling invincible when so many of our stocks are so far outpacing the broader markets which have been struggling all year. In the Trading With Cody Chat Room today, there are a lot of comments like these:
- $SPLK breaking out.
- LOTS OF THINGS WORKING WELL we have had great timely trims and great timely buys overall YTD.
- Good trade on AMBA
- YTD has been nice
- sounds like your YTD performance is outpacing that of the S&P!
Just a reminder that it’s better to sell when you can, not when you have to. And on that note, I also noticed that my ratings for most of our long positions crept lower this month, as most of our stocks ran higher.
And further on that same note, remember this?
Back on December 18, 2014 I wrote:
“I am buying a small first tranche of call options in GOOG, dated out into January 2016 with strike prices around $540 or higher. Will add a second tranche to this batch if GOOG were to get hit again in the near-term. I’d mentioned I’ve been thinking about scaling into some more GOOG exposure and this is the approach I’m taking as I already have some common from much lower prices still.”
And then I added more Google common stock to my portfolio a couple weeks after that when GOOG hit $490 per share, writing:
“This will be my last Google purchase for a while, as I now have what I’d consider a large position in the stock and don’t want to commit any more capital to it for now.”
I’ve trimmed some Google common and call options in the time since those days when Google was below $500 per share, but it’s time to go ahead and do some more trimming. I am selling the last of my GOOG January 2016 call options that we bought when we saw the sweet pitch in front of us. There will be more of these kinds of pitches and opportunities in days and months ahead.
Every few weeks I sit down and go through my entire portfolio and rank each position on a scale of 1 to 10 and then send it out to my TradingWithCody subscribers. It’s very important to look at your own positions in order from largest to smallest and to rank each asset, equity and position you own. Doing so will help you realize the opportunity costs of owning lower-rated positions and to help you sell your losers while riding your winners.
Here’s a list of my latest positions. I’ve broken the list into Longs and Shorts. And from there, I’ve broken down each list into refined categories in order from the largest positions within each category to the smallest.
Finally, I give each stock a current rating from 1 to 10, 1 being “Get out of this position now!” and 10 being “Sell the farm, I’ve found a perfect investment” (there will never be a 10 rating, because there is no such thing as a perfect investment, of course).
Remember: I wouldn’t rush into a full position all at once in any of these stocks or any other position you’ll ever buy. Patience and allowing the market and time to work to your advantage by buying in tranches is key. Maybe 1/3 or 1/5 of whatever you might consider to be a “full position” in any particular stock. And I wouldn’t ever have more than 5-15% of your portfolio in any one stock position at any given time. The younger you are and/or the higher the trajectory of your career income, the more concentrated and risk-taking you can be with weighting in your portfolio. But spread your purchases and your risk out over time and over a several positions no matter your age or risk-averse level.
Scaling into a position using an approach of buying 1/3 or 1/5 tranches over time is how I build my personal portfolio positions, but there’s no scientific answer for your question. Sometimes you have to pay up for the latest tranche but I try to be patient and wait for a temporary sell-off to add to the existing position.
So here’s the list:
Longs –
- Forever assets and other permanent holdings –
- Media and other private investment/business holdings (9+ because betting on yourself and running a business is always a best bet)
- Real estate, including land and the ranch I live on in NM (8)
- Physical gold bullion & coins (8)
- Primary stock exposure portfolio
- Apple (7)
- Facebook (6)
- Google (7)
- Ambarella (6)
- Sony (7)
- Synaptics (7)
- Sandisk (7)
- First Solar (8)
- Palo Alto Networks (7)
- Splunk (7)
- F5 (7)
- Whole Foods (7)
- Twitter (7)
- Lindsay (6)
- Iconix (8)
- GDX call options (8)
- SLV call options (8)
- Primary short portfolio
- Pandora (8)
- McDonald’s (7)
** NOTE FOR NEW SUBSCRIBERS:
If you’re new to TradingWithCody or if you’ve been a subscriber for a while but haven’t acted on much of my strategies yet and/or if you haven’t been in the markets, but you’re sick of getting 0% on your CDs, Treasuries, savings, checking, etc while the markets have been continually hitting all-time highs this year, what should you do now?
Before you ever make any trade, step back and catch your breath before moving any money anywhere. Rank your positions and your whole portfolio and make sure you’re not about to make any emotional moves with your money.
If you haven’t yet read “Everything You Need to Know About Investing” then spend a couple hours doing so, please. It’s a quick read but chock-full of important ideas, concepts and strategies that amateurs and pros alike should understand.
Then, take a look at my own personal portfolio’s Latest Positions and slowly start to scale into some of the ones you like best and/or the ones I have rated highest right now. I’d look to start scaling into a few of the many stocks in the Latest Positions that are at all-time highs along with a couple that we’ve recently featured in our Trade Alerts that I’ve personally been scaling into.
You can find an archive of Trade Alerts here.
