Recent Sell – Realty Income Corp

Realty Income

As most regular readers are aware, I have been liquidating some of my holdings lately. This has been driven by a few different reasons – driven by a combination of market conditions, complacency in the market, lack of belief in individual holdings, the yearn for simplicity provided by index funds etc. Some of these reasons have been summarized in this post. This post captures another recent sell in my portfolio.

As the market continues to hover around all time highs, I have been thinking more about investor psychology and introspecting my own mentality. Recently I posted an article entitled “Do You Love Your Investment Holdings?” detailing how investors can fall in love with a holding and try to justify it even when the evidence points to investors to come to different conclusions instead. This can be driven by familiarity and a bias that comes with ownership of shares in a company for a prolonged period of time. This is a common pitfall that investors fall for and I came to the conclusion that I was facing the same issue with this holding. While this particular company is one that I didn’t quite love, I have noticed that most investors in the community seem to love it thanks for the dividends.

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Recent Sell – Qualcomm Inc

As most regular readers are aware, I have been liquidating some of my holdings lately. This has been driven by a few different reasons – driven by a combination of market conditions, complacency in the market, lack of belief in individual holdings, the yearn for simplicity provided by index funds etc. Some of these reasons have been summarized in this post. This post captures another recent sell in my portfolio.

As the market continues to hover around all time highs, I have been thinking more about investor psychology and introspecting my own mentality. Recently I posted an article entitled “Do You Love Your Investment Holdings?” detailing how investors can fall in love with a holding and try to justify it even when the evidence points to investors to come to different conclusions instead. This can be driven by familiarity and a bias that comes with ownership of shares in a company for a prolonged period of time. This is a common pitfall that investors fall for and I came to the conclusion that I was facing the same issue with this holding. Coming to this realization, I decided to sell my shares and exit this investment.

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Option Assignment – IAMGold Corp

A closure in my portfolio — my covered call option that I wrote in June 2016 got called away closing my position in IAMGold Corp (IMG.TO). Its a company that I have held in my portfolio for a long time (approx 3 & 1/4 years) – through the depths of the gold & precious metals bear market. Now that the prices have recovered, I wanted to upgrade the quality of my gold mining company holding. IAMGold is a decent company, but has its problems with some management issues. There are better companies out there and I decided to upgrade with the purchase of B2Gold Corp (BTO.TO) last month.

Overall gains (including dividends and options premiums): 28%

Option Assignment – The Jean Coutu Group

Another position exits my portfolio. Earlier in the month, I had written a covered call option on The Jean Coutu Group (PJC.A.TO). The option expired on Friday Jul 15, 2016 with the stock ending up in-the-money, which resulted in the stock getting called away. I owned PJC.A.TO for approximately two and a half years and the company has traded sideways during the duration, although it reached a high of mid-$20s about a year ago.

I still believe in the long term growth of PJC and sad to see this stock get called away, but its a risk you take with options trading. Making a decent profit and staying in cash during these volatile times isn’t so bad I suppose…so I’m not complaining.

Overall gains (including dividends and option premiums): 17.88%

Recent Sell – The Big Reset Edition

I have broken the one rule that dividend growth investors never dream about doing and Im sure this will not be a popular post with the community. I sold part of my portfolio and took some of my money off the market! I have been antsy over the past few months and decided that for the sake of my sanity, I needed to move part of my portfolio to cash. This was the easier part of the decision. Which stocks to sell? That was much harder to decide. This post details my recent sales in the portfolio and provides my reasoning.

As most investors are aware, buying is the easy part. Its the sale: when to take the profits? or when to cut your losses and re-evaluate your investment thesis? — that is the hard part. Dividend growth investing, while I still really like the overall concept, can cloud this judgement a bit. Being “paid to wait” (dividend payments on a regular basis) is a double edged sword. There are countless articles out there which detail why this is the best thing since sliced bread, so I will not rehash the idea. But the flip side of this argument is that investors become too complacent risking a lot of their capital for very little reward.

Reason # 1 – Insanity in the Market

Image Source: Hedgeye

Image Source: Hedgeye

This market is crazy. There is no other way to put it. There are plenty more high-profile institutional investors, with far more resources than retail investors, who have been sounding the alarms. But like I have learned during the previous cycle (in the lead up to financial crisis of 2008/2009), I dont buy their arguments simply because they say so. I decided to listen and read through their reasoning (for e.g., see Jeff Gunlach’s latest presentation, and Stan Druckenmiller’s latest presentation) and looked at the data. The data doesn’t lie. And as far as my limited understanding goes, I can see why this market cannot continue its run higher, without some bloodletting.

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