I Just Sold These 2 Stocks Because This Market Does Not Make Sense
Whether we like or not, it’s time to trim positions
What a rollercoaster this market has been for the past months! No one would believe that 7 months later we would be hitting all-time highs.
I am not here to discuss why it happened and what were the forces responsible for this massive rally in the stock market.
Instead of trying to guess if the market will continue to push higher, I prefer to take partial profits and replicate money managers.
Long-Horizon Portfolio
My long-term portfolio detailed last updated here, exposes my main growth portfolio. I have defined a set of rules, which acts as a check-list for my risk management and discipline as an investor.
I consider one of the most critical things to do when investing. Setting an investment framework that allows you to control emotions and stick to a set of actions independently of market behavior.
Last Friday, I was up 50.7% in my current holdings. That is roughly $25K in a $50K portfolio. After this week's all-time highs, I believe it was the right time to trim my 2 largest holdings: $TSLA and $AMZN.
The Tesla Parabolic
While my returns were mostly driven by Tesla, delivering a whopping 700% return, I admit to myself that Tesla is a major speculative play.
There is no logic behind its crazy valuation and if in the near future, Elon Mush becomes the CEO of the largest “car manufacturer” in the world, there is no fundamental reason to keep buying at these levels.
It’s just hype and while I hope it lasts a bit more, I am ready for a major leg down.
Sticking to my 10% portfolio rules, I just trimmed my position in Tesla at $1870. I am still considering protecting my profits if the price hits $1840.
Jeff Bezos Is Selling
One of my top holdings is Amazon and in recent weeks, the equity of my investment crossed 11%.
Following the big sale block from Bezos in early August at prices around the $3150 mark, I got a better deal and managed to sell at $3300.
While I believe in the long-term growth of the Bezos machine, protecting my portfolio is far more important than being focused on long-bias.
Managing Emotions
While everyone can agree, that when the overall market drops is an opportunity to buy more at cheap prices as the March drop has just shown, greed is also something important to think about.
While I might be bullish in both companies for the long term, we have to think that money managers will eventually trim positions and re-enter at cheap prices.
Following some of the hedge funds, teaches you to be disciplined when something like Tesla explodes within your portfolio.
Thank you for reading and hope I contributed positively to your day!
I hold a long position in Tesla and Amazon. This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.