In these times of economic collapse and the unavoidable bear market, being an investor is hardest. Even though I am a long term investor, the damage which has been done to my portfolio hurts, especially because it has been done over the course of such a short timespan.
Right now it is more important than ever to consider the long term: the COVID-19 pandemic will eventually be overcome, humanity will survive and after a while, companies will continue to thrive again. Currently though, the damage is real, and might not only be reflected in share prices. If you are a regular reader of my articles about the Future-Proof Portfolio for Young Investors, you will probably know that I place some emphasis on steady and growing dividends. Make no mistake: some dividends will be cut, and I have no illusion that my portfolio will be entirely spared from this, though I hope it won't be too bad.
Without further ado, let us take a look at the current state of my portfolio. On the right column I list the total gain/loss, since I think this is a more relevant metric than the 2020 gain/loss. Please keep in mind that this portfolio was initated in January 2018. All numbers in the value column are in euro.
|Name||Ticker||Shares||Value||Weight||Total gain/loss (including dividend)|
|Archer Daniels Midland||ADM||83||2.663,43||4,60%||-4,46%|
|Armanino Foods of Distinction||OTCPK:AMNF||488||1.090,20||1,88%||17,09%|
|Vestas Wind Systems||OTCPK:VWDRY||35||2.636,17||4,56%||36,81%|
|Johnson & Johnson||JNJ||17||2.115,82||3,66%||13,90%|
|Automatic Data Processing||ADP||20||2.459,29||4,25%||31,00%|
After a fantastic 2019 performance, the portfolio is now down to a gain of about 5%. That is, since January 2018. Of course, the current bear market also hit my portfolio hard, but when you take a broader view, the damage in stock prices has been limited.
Individual stocks have been highly divergent in their share price development lately, I will discuss some names which catch my eye below:
I already mentioned that Accell was the first company in my portfolio to entirely discontinue its dividend payment. I'm not happy with this, but I get it: the company is not being threatened in an existential way at the moment, but in case things get worse it is a good idea to save a bit more cash. If things go well again, they can always decide to pay this as dividend in the future.
It is to be expected that more companies in my portfolio will lower or cut their dividend. Here is a list of the companies I am most worried about:
As far as I can estimate now, I would say the other dividends in my portfolio are relatively safe from cuts. They will suffer from COVID-19 too, but the crisis needs to deepen in a big way for them to cut their dividends.
As I did during the previous two years, I will stick to my plan. I am building this model portfolio for my retirement and do not need to sell anything. I am living well below my means and luckily still have my job. Even if I'm laid off as a result of this crisis, my low expenses mean that I could survive for quite some time without having to resort to selling my investments. If you would ask me for a single piece of advice for starting investors it would be this: first make sure your personal finances are solid, only after that you can start paying attention to building up a portfolio.
I expect this bear market to get worse. You cannot shutdown the economy without some major economic damage, and though most governments try to mitigate this with massive stimulation packages, the damage will be big. But I think it is warranted if it means we can save many people from dying from this terribly virus.
As part of my plan, I will invest a total of €3,000 in the portfolio every half year. I chose this number because it should be a doable figure to save every half year for people with a relatively good job. Also, in 2019 my portfolio paid me €2,000 (excluding taxes). I do not automatically reinvest these dividends, except for the semi-annual €3,000 investment. My rule of thumb is to buy investments for this amount of money every winter and every summer, and this winter I have been a bit lazy with it. Technically I am already late, but I will shortly start investigating new options for investment and will update you all about this in my next article. Please stay safe and healthy.
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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Disclosure: I am/we are long all stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.