The US market, especially NASDAQ, has been on a roll recently after the dovish Jackson Hole speech of Powell. Some of my US tech stocks and ETF gains have increased along with the rally. Yesterday, I decided to take some profits off the table. Even if the market trends higher after that, my automated monthly investment plans should ensure that I can still benefit from further gains. Otherwise, a downward trend in the market means that I get to dollar cost average downwards on my existing positions.
I know the argument is that I should let my winners run. The last time I did that was with my Chinese tech stocks and ETF earlier in the year (didn’t take any profits). They crashed after the regulatory environment changed and I didn’t react quickly enough. Yes, I had the opportunity to average down on my Chinese tech stocks and ETF holdings. But these positions are still in unrealised losses and I have to wait for the recovery down the road to reverse them into gains.
The problem with overseas growth stocks in general is that only some of them will eventually grow bigger and become more profitable. The rest will either stagnate or get wiped out by their competitors. That’s just the nature of the industry and not all of them will thrive or even survive. The tricky part is to identify the gems early on and hold them for as long as possible. Riding through the up and down turns by just watching them grow.
Otherwise, choosing the wrong stocks to stick with for the long term results in the initial gains becoming losses in the end. I’m not confident of my ability yet to identify these growth stocks so early on at this time. My approach is to take the profits once I achieve a significant percentage gain. Which is why I sold my holdings in SEA, Invesco QQQ and Nvidia yesterday. Overall percentage gain is about 50%, pocketed profits of US$12,000 and took back my capital of US$24,000.
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My share sales proceeds of US$36,000 should be credited next week and I will rotate some of them into my value stock positions to average down. A portion to Coinhako to buy DAI for transfer into my Hodlnaut crypto interest account to be token swapped into USDC and USDT for higher interest earned as BTC and ETH. And the remaining to increase my cash buffer for any opportunities in the market that comes up.
In the meantime, my wife has diverted some of the automated monthly funds transfers from her StashAway account to her new Endowus account. Setting up a new ESG portfolio for this cash component in addition to the current Core portfolio for her CPF-OA. The total amount allocated to robo-advisors for investing every month remains the same but she’s keen to build up a bigger position in Endowus.
StashAway’s performance has been lagging that of Endowus in the past few months because of the different investing strategies adopted. My wife wants to take a chance on Endowus’ approach with some cash each month (that was originally meant for StashAway) since her CPF-OA would already be invested there. I’m in favour of her initiative as long as she’s not chopping and changing between robo-advisors.
Our aim for the automated monthly investment plans is to build up a large portfolio of ETFs and funds (some with distributions) over time that stablises the rest of our investment portfolio. Where we take on more risk to invest in individual stocks and cryptos for higher gains and dividend/crypto interest income. We can be more aggressive with our risk-taking as long as we have the knowledge that making big losses should not blow up the entire investment portfolio.