I have decided to continue posting while things take their course around the ecosystem. The fact is that it has become a routine that I enjoy as it allows me to reflect and monitor my decisions. It is almost like a personal journal of sorts which keeps me honest and accountable for my actions. Because of this approach, I was pretty excited to write about last week and the markets before the mess that ensued yesterday in the ecosystem. However, I think it is a good story thus far.
After a year and a half of being out of the equity markets, I decided to dip my toes back in given the amount of panic and fear that was clearly in the market. I believe that the sell off has been exaggerated and although I do believe that the world economy is due for some struggles, I thought that the discounts offered on some sectors gave an opportunity to start positions at interesting valuations. I started my move by allocated 5% of my retirement account portfolio into a broad market index as a base. This is the first time in 3 years that I allocated anything in that portfolio to equities.
I am watching closely as I made use my Dollar Cost Average to build that position prospectively instead of adding to my cash position in that portfolio. This will help over the longer term as we navigate through the potential volatile markets ahead. I continue to avoid bonds as the historic drop in yields have made the asset class even more expensive. Seeing the 10yr US yield below 1.3% is amazing as that is lower than some of the dividend yields we are seeing in historically Blue Chip Companies! That led me to research some of those sectors as an opportunity to leverage their income generation as well as their valuations. The tumble in the markets last week did not discriminate as everything was sold!
I did not want to get into too much research so I stayed away from individual Companies despite some attractive prices on a couple of equities that I have been watching for a while. This was also done on an old brokerage account so I have yet to setup my new one so the research tools are not as powerful as they will be when I open the new account soon. Therefore, ETFs were my choice for this quick decision. I pulled the trigger while the markets were at their lows on Friday so looking back, I could not have been any more precise (at the moment).
While there is surely downside risk, I am happy with these selections. The income and yield that they will provide the portfolio seem attractive and if the economy continues to move along despite the challenges, it will ultimately pay off. It also keeps me busy as I have missed being involved in the equity market as the options in the crypto markets have been somewhat stale. Interestingly, the volatility of the markets have appeared similar between the two so at least the excitement is there! If the challenges continue, more opportunities will arise so I am accelerating my move of capital to be ready so I will keep updating as I go!
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