In a prior blog post, I discussed the fact that I had made a sweeping overhaul of our investment portfolio for two reasons: the uncertainty that Donald Trump will act rationally, both with regard to the economy and to other policy areas; and the fact that I need to simplify our portfolio, so that my Wife )nd our Daughter) will become more involved. That’s just common Estate Planning sense! That post is as follows: https://thetruthoncommonsense.com/2016/11/22/why-i-dumped-my-apple-stock-a-week-ago-monday/.
I specifically cited the fact that I had dumped all of our Apple, Inc. (25% of our portfolio); but, that’s not because of the company, per se. I believe that it is still excellent, which is well-managed. In fact, I might even buy some back someday. As the largest corporation on earth, however, and the fact that its iPhones are assembled (but not manufactured) in China, it might be Public Corporate Enemy #1, should Trump continue to act like an unstable spoiled brat!
I will go into more detail, describing why I decided to simplify our portfolio, in a follow-up post, Now, I don’t intend to go anywhere, so you will have many more blog posts to delete, for years to come. But, that is why I went outside of my normal portfolio method of operation. As I suggested when I began this blog, from time-to-time, I will write about life and career changes, that are best planned for—before, rather than after, they occur.
I actually reached my Eureka Moment on November 14, and downsized our portfolio, based on Asset Class switches, as follows: Individual Stocks from 42%, down to 16%; ETFs (exchange-traded funds) from 18%, increased to 33%; Mutual Funds remained even, from 37% to 34%’ and Cash increased from 6% to 16% (plus, we have a little more outside). The number of individual stocks dropped from around ten to four; however, the ETFs (still) are mainly replicates of major stock indices (i.e., DJIA, S&P 500, Russell 2000) and a few Sector SPDR ETFs to enhance specific sectors, such as Energy, Technology and Utilities. So stocks did’t really decline, they are now just more diversified.
I kept four individual stocks; however, I am not recommending that you invest in them. Rather, I wish to give you a little flavor of how I make my investment decisions:
Aetna: provides health care insurance. This is the whimsical one, in that its hard to tell how it will fair in a Trump World; so, the amount invested is minor. AET has performed well, as the Affordable Care Act (”Obamacare” to GOPers), as some 25 million more Americans now have health insurance. Under Trump, even he doesn’t know what he will do, So, Aetna may benefit with less customers, but paying higher prices under Trump-O-Mania.
IBM: Contrary to popular belief, IBM’s major revenue service is IT Solutions, rather than focusing on hardware or software. Feel companies can compete with the fact that it can provide global quality service in more than 150 countries around the world. Many corporate IT chiefs prefer its global reach.
ITW: Illinois Tool Works is composed of independently operated industrial tool-shops in 52 countries around the world. The independence enables it to modify its operation to the needs of its local corporate customers.
UTX: Serves industrial and government customers as a (number one-or-two) market leader in four distinct areas: Otis Elevators; Carrier Heating and Cooling; Pratt & Whitney and Aerospace. Such diversification, by product and type of client provides stability.
Several people have asked what I did with our money when I bailed-out of Apple, both in comments on the blog and personal Emails. Let me add that: when the Economy went through a major melt-down in 2008, and the Dow Jones stock index dropped from 14,000 to 6,500 within 18 months, we road it out, fully invested, but with a few “tweaks”, And that was with three-to-four years until retirement! But, seven months before I retired. I decided to add about 25% in a global bond portfolio. And this re-shuffling now is partially a follow-on to that. Hopefully, I’ll get the conclusion written by tomorrow.