Weeks are literally ticking away right now! Time goes so quick, but I must say that I’m having a lot of fun as well 💪
There was a lot going on in the news again this week and I had a lot of thoughts about my dividend growth investing portfolio and the stock market. Hence, it was hard to choose what to talk about in today’s 5-bullet Sunday.
In the meantime I also published a post about 20 Investment Quotes that often inspire me and which has shaped me as an investor. Check it out if you haven’t read it yet and let me know what you’re favorite investment quote is.
I sincerely hope that you enjoy today’s edition and as always, have a lovely remainder of the weekend!
5-Bullet Sunday is a weekly blog post with 5 topics that were on my mind this week related to Financial Independence and Dividend Growth Investing or something that just fed my curiosity. An overview of earlier posts can be found here
What to do with COVID-19?
We are much better in control over COVID-19 than we were back in March. The virus took us by surprise and not a lot of testing was happening (we simply didn’t even have proper tests). This is different now and it’s visible in the statistics from the World Health Organization.
Just browse through some of the European countries and you will generally notice that the amount of cases has been rapidly increasing since the end of the summer all they way up to now. The trend is not something promising though, but the good thing is that the amount of deaths is rather flat.
Except maybe for one of the countries like Spain. It recently saw an uptick there:
We do need to keep watching out though, because eventually more cases will lead to more deaths. Flu season is starting and this might bring us back to horrible numbers again.
Having said that, from a stock market perspective I believe that we’re not going to see such a rapid decline again as back in March. At least from a COVID-19 impact point of view. I believe that we won’t see a full lockdown again, but rather lock-downs in hot-spots. The global economy can deal with that. Planes are anyway not really carrying passengers anymore, so that’s already priced-in.
I shifted from COVID-19 to the US presidential election as the major event that might trigger a stock market correction in the short term.
How does this affect my investment strategy?
I recently shifted back to normal monthly contributions. I’m not tapping from my war chest anymore, because I feel that the stock market has left its value zone behind it. Let’s see if we get better opportunities again in the end of this year.
Update on Option Trades
I closed out my ExxonMobil option with a loss of 600 Euros. It was a put option that I sold at the brink of the stock market decline back in March. If you’re interested, I’ve written about my option strategy earlier this year and I’ve also used my $XOM option as an example as part of a strategy to mitigate losses.
Having said that, I could’ve sold another $XOM put option again to compensate for the loss, but I decided to just take my loss and release the reserved “margin” to earn money from options on other stocks. I simply don’t want to own more stocks of ExxonMobil, because I’m not seeing a catalyst anymore. The oil industry is taking much longer to recover. I would probably need to see some more airplanes up in the air again 😉
The loss didn’t affect my appetite for trading stock options, because I sold another put option for Johnson & Johnson at $0,70 with a expiration date of 16 October ( 1 JNJ P 16 OCT 2020 135,00). The company would spot a 3% dividend yield at $135.00. My margin for the upcoming month is $2596,00 hence I’m getting a 2.7% yield in just a single month.
Why 16 October? Well, the US presidential election is coming up in November and that might just be the trigger for a large stock market correction in case Joe Biden wins.
September is nearing to an end so I already started to look a bit into tax-harvesting. I realize that tax-harvesting doesn’t apply to all of you, because if you’re from the Netherlands then you probably couldn’t be bothered about it at all (ref: wealth tax).
Hence, I asked myself:
- Where did I take some profits?
- Where do I have my losses?
I don’t have too many profits, because I typically buy-to-hold. However, I did do some selling this year as part of my spring cleaning and I sold some very small positions which I had in my portfolio after spin-offs (i.e. former $UTX).
I know now what my realized gains are (YTD) and I will probably sell few shares in General Electric in the upcoming few weeks to ensure that I don’t need to pay taxes on those profits.
How about you? Is tax harvesting also a topic applicable to you?
DivHut shared his September stock market purchases. There’s one company in there which I own as well. I recommend to check it out if you’re seeking inspiration about some US dividend stocks that DivHut found interesting. Actually, he didn’t just found them interesting, he purchased them.
David Fickling wrote a nice opinion piece on Bloomberg about the increasing popularity of plant-based milk vs real milk. Needless to say, I have confirmation bias regarding my thesis about Danone, so I enjoyed this article a lot 😎
The Sunday Investor wrote an article for SeekingAlpha in which he makes the case for switching from the Vanguard S&P 500 ETF into the Vanguard S&P 500 Value ETF. He provides an interesting analysis which is related to rebalancing portfolios and the current disparity between the 11 stock market sectors. This could be an interesting article for you if you’re into ETF investing and not using a pure-buy-and-hold strategy.
Chamath Palihapitiya shared his stock investing lessons on Twitter. I found it very insightful to read and especially from someone who became an investor due to his past investment decisions.
I stumbled upon an educational video from Peter Lynch again. It contains a wealth of knowledge and it’s definitely a master class on stock picking. If you don’t have the time to fully watch it, then I recommend to start at around 28 minutes and 49 seconds. That’s where Peter briefly touches on dividends.
That’s it for the week. I hope that you enjoyed this week’s 5-Bullet Sunday 👌
As always, have a lovely week ahead!
PS: don’t forget that every comment = 1 Euro to Kiva. I’ll give an update on how far we are in next week’s 5BS.
European Dividend Growth Investor