Tuesday, May 19, 2020

How I Handle Booms and Busts

As most westerners do, I believe in linear time. However, I also believe in cycles. If you read history and economics as I do, you can see that there are lots of cycles. The one that I am most interested in, because I invest, is the booms and busts or bulls and bear cycles of the stock market. Because I believe in cycles, I know that there will be bull and bear markets in my future.

I know a lot of people believe in the bull and bear cycle of the markets, but they try to control what is impossible to control. By that I mean they try to anticipate these bull and bear markets. I do not try to invest in the time of the bull and go to cash or mostly cash in the time of the bears. This is an impossible job. I do not do this, but rather I just go with the flow.

What I mean is that I have built a portfolio in my Canadian Trading account to withstand bear markets. We are in a bear market and my portfolio is behaving as it should. I build a portfolio of good dividend growth stocks and I have hung on to these stocks through the good times and through the bad times. I have stocks from a variety of sectors in Financials, Utilities, Consumer, and Industrials. I do have resource stocks but they are less and 1% of my portfolio.

Since I have been through a number of bear markets, I do know what to expect. I expect that the value of my portfolio will drop. I expect that some of my stocks will cut or suspend their dividends. However, others will keep the dividends flat and still others will raise their dividends. Each bear market is different and therefore sectors are hit differently in every bear market.

Currently, I am keeping an eye on the market, both TSX and S&P500 indexes. Both have sort of been flat since April. I keep an eye on the stocks in my Canadian Trading Account. Stock Trades Canadian currently seem good at tracking Dividend Cuts, so I keep an eye on what new stocks appear on their site.

I have a couple of stocks cut or suspend dividends, but this is nothing unusual in a bear market. I see nothing I want to buy at present. Our stocks are not that cheap, considering we are in a bear market. There is nothing that is particularly worrisome for me at present. For the future I am worried about the recovery of the economy from the lockdown and the high level of debt (personal, companies and government).

On my other blog I wrote yesterday about Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) ... learn more. Next, I will write about Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF) ... learn more on Wednesday, May 13, 2020 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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