Things have changed, we are living in a different reality to January this year. There is much media blurb about markets bottoming out and V shaped recoveries. I personally think that the repercussions of the current lockdown are going to reverberate in the market for some time.
So what to do now with the investments? I, like all the media pundits, really don’t have a clue what’s likely to happen next. There is an unprecedented amount of speculation about the macro economic impacts of the crisis. If the CEOs don’t have a clue about the future of their businesses, what hope do the analysts, pundits or I have.
I’ve been wondering how to approach this. So far I’ve done very little that differs from previously. I perhaps need to be a little more dynamic in my thinking. Persisting with buy and hold may not be enough.
I had just under 20% of the portfolio in cash so potentially I’m in a position to buy bargains. But as I’m fortunately working I’ve had no time to study the opportunities. To manage the investment better there are things I need to do:
- Assess the current state of the portfolio
- What will be the new normal? things are unlikely to return to the earlier status quo
- Which shares are at risk (some businesses will not survive)
- What sectors will benefit
- What sectors to avoid
- Are my trading rules still fit for purpose?
- Re-consider the regular trading (free trades) investments
- Make a new watchlist, the original watchlist is no longer fit for purpose
There’s much work to do to address this list. There are some decisions that I’ve already made.
I’ve upgraded my account to a frequent trader account. Previously for UK trades I’ve relied on the once a month ‘free to trade’ regular investments and paid for non-UK trades from the investing credit or cash in the account. To accommodate the current volatility I want the flexibility to average into positions via more frequent smaller trades, whether UK or International. I also might need to get shot of some shares with a broken thesis.
I’ve decided that I need to have a more geographically diverse portfolio. I had already started to add some US stocks, but I need to add to that and also look at other markets.
I’ve started new watchlists – one for Simon Thompson ‘Bargain Shares’ – one for US stocks – one for the high conviction stocks in my current holding – and one to gather new ideas or ‘dip’ opportunities.
This long weekend is an opportunity to do an assessment on the risk level for the current holdings, and start a plan for how to approach investing in the coming months.