Currently every position that I hold is underwater. I have well and truly entered drawdown territory. I am not overly surprised for two reasons: [i] the portfolio tracking started in April 24 which was pretty close to the top of the market and [ii] the market is in the process of a crash.

I am sanguine with the situation. Why? It was planned for. The portfolio opened on April 24 holding 117,290 shares of common stock of 8 companies. Currently I hold 160,490 common stock shares in 10 companies. That is a 37% increase in shares held. I am only slightly underperforming the market, and that is due to a higher average beta.

As I leg into the various positions, once the market trades higher, I will be loaded with stock, of a higher beta, and will outperform, with additional shares to the upside. In addition, the accumulation of cheaper stocks that pay a dividend will increase my yield, which will also help outperformance.

Add to that the fact that I still hold just under $300K in cash [1 position is BIL which holds $89K as cash], which is almost exactly the same amount of cash that I held on April 24 and it is clear that I was selling stock at the highs, and building the cash reserve, which will allow the further accumulation of stock should the market trade lower, which I suspect it may well do.

Whatever your trading/investing style, this is the time to stick to your plan that you already had for when there was a market crash. For some, that will be sitting in 100% cash, some will be short. Discipline is key. Having sat through the 2001 Bear, and the 2008 crash, I’m at ease.

Advertisements