Investment Account Disclosure – April 2020

Gain/Loss:

April has been a good month for my portfolio, thanks to an early bounce-back from the Coronavirus plummet in the previous month. Starting from the top-left, you can see I ended last month at £2,638.27 and finished this month at £3,298.29. A total gain of £660.02! This means I’m up, as you can see at the bottom, by £325.79 since I started my investment account. Which is a gain of 10.9% in 9 months! Not too bad, all things considered. However, it’s worth noting that at it’s peak, prior to the pandemic, my portfolio was up over 30%!

Insights:

From the above left image, you can see I’m at about 90% stocks and 10% cash. I’m normally at more like 20% cash, but there were too many bargains to be had this month! On the right, you can see the split of my portfolio by industry. This list is topped by Tech at 39.6%, Other (which is made up of ETF’s), Cars (Uber), etc..

Anyone who’s read my previous posts might be surprised to read that I have more invested in individual stocks than index funds or ETF’s. Especially considering that the advice I give involves sticking to strictly index funds. But this is only if you don’t want to spend the time researching individual stocks and taking the additional risk involved with doing this. And don’t get me wrong, I wouldn’t blame you for feeling that way when you can get returns of 5-10% from a set-and-forget index fund portfolio. However, I do spend the time researching individual stocks and finding long term investment opportunities in the form of growth companies. And so far it’s working out alright! In fact, I’m seeing far greater returns from my individual stocks than I am from my ETF’s, which you’ll see from the ‘Stock picks of the month’ below.

Stock Picks of the Month:

This is every stock and ETF that I’m currently invested in via my investment ISA. As you can see, almost all of my positions finished the month in the green except for Carnival Cruise Lines (CCL) and Diageo (DGE). I’m gonna pick two stocks to talk about this month in terms of my thesis for why I invested in them. This month, I’m gonna blubber about CCL and Uber.

Carnival Cruise Lines (CCL.L)

CCL is a bit of a sore subject for a lot of investors who purchased the stock before or during the Coronavirus Pandemic, but I certainly don’t regret it. It went from hovering around £31 to £6.20 in the space of 1 month. Ouch! I dipped my toes with 1 share at the beginning of Feb when no one knew what was about to happen with regards to Coronavirus. At the time, I felt the company was undervalued in terms of its share price due to the fact it’s balance sheet looked amazing! It’s revenues were growing by a £BILLION each year, and it’s forward PE was dropping. It’s also the biggest player in the cruising industry and has £45BILLION in assets vs £19.6 BILLION in debts. More than enough to ride out any storm. The price then dropped two weeks later. “Great!” I thought! If it was undervalued before, it’s even more so now! I’ll take two more please! Then Coronavirus went global and confirmed cases were announced onboard CCL’s ships! Long story short, I’m down about 30%!

Am I panicking? No. Here’s why: I still think, despite all the doom and gloom around this stock, the fact they diluted the share price to raise funds, AND the fact they’re taking out debt to cover their expenses at 11% (which is insane 😢) that they have what it takes to get the price back up to around the £20 region within the next 5 – 7 years. It’ll take some doing to get back up to the £30’s. But, they’re still the biggest player in thus industry. They still have the assets. People still want to cruise (once the pandemic has ended, of course!). My strategy: I’m by no means going to be chucking all my money at this stock. Far from it. But I will be picking off shares here and there whenever the price is under £10. Until my cost basis is around the £10 mark. Then I’ll be holding.

Uber (UBER)

At one point before the pandemic, I was up around £300 on my Uber position. I bought into Uber just as the lockout period (the time in which early investors aren’t allowed to sell their shares) ended, and the stock price tanked about 40% in the space of 3 months, from the mid-forties to around $26. It’s IPO was £41! And I was buying shares at $27!? To me, this was a no-brainer! This was Uber! The single biggest player in the ride hailing industry with massive backers, huge amounts of cash in the wings and a business model that people in cities were completely dependant on. With Uber, there is MONEY TO BE MADE! I literally see no risk with Uber. Maybe I’m blinded by my bullishness on this one 😂. But really, many competitors have come and gone while Uber has been getting bigger and bigger, expanding into new countries and regions, expanding into other markets with Uber eats and Freight, AND testing autonomous taxis… All these offerings are growing, too! IMO, this will be a $150 – $200 stock within the next 3 years. I’d have said sooner if it weren’t for the pandemic and the recovery period they’ll have to endure along side every other company on the planet.

Monthly Market Mood

I general, the market at the moment is freaking me out a bit. Here’s why: we’ve been hit with a once-in-a-hundred year event in the form of Coronavirus. Money velocity has al but come to a complete stop! This means the economy has effectively frozen. Normally, you’d go out and get a haircut, that pays your barber, who then takes his wife out to dinner at a local restaurant, that restaurant can then invest more into expansion to grow their business, maybe open up another restaurant in the next town, they employ more staff which creates jobs, which creates tax revenues and drives more money into that local area as those employees buy stuff which supports other businesses etc etc… None of this is happening right now! The £BILLIONS that changed hands every day has dropped almost entirely! Yet the S&P is only down about 9%. The NASDAQ is only down 8%…. WTF is this?

The economy is being propped up by government stimulus which they have admitted themselves, is completely unsustainable! Which means this stimulus will have to stop or be rolled back at some point soon! This will go away MUCH sooner than businesses, the economy and peoples incomes will recover. Nations and entire, multinational trading blocks are predicting contractions in their GDP that haven’t been seen since the 30’s during the great depression! And the S&P is down 9%?!?!?

Here’s what I, and many others believe is gonna happen over the coming weeks and months. Simply put, these indexes will see drops of 40% plus! The reason is, there’s companies who’s valuations have barely changed since the entire world went into lock-down and stopped buying stuff! That’s not okay. The income for a lot of these companies has reduced significantly! 100% for some companies. And yet there valuation is carrying on as if everything is completely normal. It’s not.

What am I doing? Am I gonna sell everything and sit back and watch? Nah. Am I buying? Nah. I’m going Cash HEAVY! so I can take full advantage of the opportunities that come my way when I this happens. The reason I won’t be selling: I could be wrong. I completely doubt that using all available common sense and logic! But I could be, and the market could keep bouncing back! In which case, I win because of the investments I didn’t sell out of today. To me it’s a win-win. I won’t invest in anything right now because I don’t think the valuations are accurate (understatement of the year). Therefore, I need the market to go down significantly before I start buying again.

What are your thought’s and feelings about the stock market at the moment? Let me know in the comments below or via the social media links at the top of the page! I’m interested to get your opinion. Remember: The comments here are my opinion and you should never buy a stock because someone else has and thinks it will make money. Do your own research and make your own choices. Your capital is at risk.

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Published by Finance&Lifestyle

A Dad from the UK documenting his journey to financial freedom. Sharing my lifestyle and finance hacks so more people can find financial independence, retire early and take back control of their future.

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