Thursday, November 14, 2019

Investing in Public Corporations



Investing in Public Corporations


    Investing in public corporations has become an important part of my life in the past year.  I will digress from my normal writing on leadership and related topics occasionally to take time and share my investment strategies and companies that I am watching.  I believe that if we value personal success, then we should prepare for the long term and I find that investing in public companies is a fun way to accomplish this.  I am not getting away from my passion of leadership, rather, I believe that sharing my views on public corporations may be helpful to some of my audience. 

    While I am not moving into primarily blogging on financial topics, however, I do want to pepper my blog with my thoughts on current markets and companies.  I also want to get into the habit of spreading public awareness of where successful organizations are and how they got that way, as it ties to their leadership.  This will just be a general article warming my readers up to some of my ideas and is no way going to be written like I am some expert financial analyst, rather, a hobby stock trader.  If you are not well versed in the language and would like to learn more, I recommend to start by learning.

A Beginner's Guide to the Stock Market: Everything You Need to Start Making Money Today



 
Why Invest?


    I use a few vehicles for savings.  I save for retirement, emergencies, and personal needs.  I tend to find saving money in an emergency fund and 401K quite boring although I do it anyway.  I like the process of researching and learning about public companies before purchasing stock and find saving through investments exciting.  I invest as a hobby and to save money.  Aside from this it just feels good to own a piece of a really large organization.

    With the many routes of investing money into public corporations now readily available, cheap, and easy, it seems silly not to.  There are many apps that you can use that avoids the hassle of having to use a stockbroker and pay commissions.  I am not an affiliate of Robinhood; however, I have found that it is the easiest to use if you are new and is commission free.  There are many others that have positive reviews and a wide range of customer support tools.  With Robinhood you can simply download the app, connect your bank account, transfer funds, and begin to purchase.  You can sell your purchases and transfer the money back.




My Strategy


    My primary strategy when investing is a hybrid one that leans much closer to income investing.  I find investing in dividend stocks really attractive.  I have this utopian vision that upon reaching retirement, I will have an income equal to a modest annual salary through the dividends of all my collected stocks.  While I focus on this and try to keep my ratio of income stocks to other stocks high, I still make purchases of growth stocks often.  When I do decide to purchase growth stocks, I usually do so for personal reasons so long as the risk isn’t too high.  I still measure and apply risk in determining how far I should position myself within that company.

    My style is more buy-and-hold rather than the quick catch and release of a day trader.  I like to purchase and forget about it.  I’d like to think I forget about it forever, but this isn’t true.  I find myself looking for strategic position and when I find a more attractive stock that I want to gain a more significant position in I’ll typically get out of the old stock and into the new.  This is what I love about trading stocks for fun as opposed to trading as a means for primary short-term income or immediate cash flow.  It allows me to make decisions based on what I am interested in and not have to worry about making a bad move.




My Portfolio

Ford (F)


    In my portfolio, I have the most significant position in Ford.  I think Ford is a very attractive dividend stock because of its history in declaring consistent dividends.  Currently the dividend yield for Ford is 7.84 and it boasts a price-to-earning ratio of 21.41.  This means that investors are willing to pay 21.41 dollars for every dollar of company earnings.  I think that the recent announcement of Ford to use the name Mustang, previously used for the old American muscle car as the name for a new electric SUV has the potential to fuel some of the growth that the PE ratio suggests will happen.  Ford has set itself up as a primary competitor to Tesla in the class of high-powered electric vehicles, and I am really interested to see what the two giants will come up with.




Coca-Cola (KO)


    Being one of Warren Buffet’s favorite stocks, I couldn’t resist the urge to follow suit and get in.  This is a pretty consistent dividend stock that pays quarterly.  It pays above average compared to other consumer goods stocks and has an impressive 55-year dividend history with growth every year!  Let’s not forget about the valuation of this giant either.  Coca-Cola has impressively valued upwards 24.43% in the last five years.  With a relatively high current P/E ratio of 29.19, we expect to see this company continue to grow in spite of signs of revenue decline.




British Petroleum (BP)


    I really liked this company’s production growth rate of 5% per year through 2021.  This paired with its dividend yield of 6.40 made BP an attractive income stock for me to take a position in.  It was down about 6 from its 52-week high when I got in and while it hasn’t performed, I am interested to see where it is at in 2022.  I was hesitant to acquire BP stock because I so closely followed the oil spill in the gulf years back and while the event is sour to me, I really was inspired by their effort to clean it up.  I concluded to get involved with BP based on this and my familiarity with this company from following the Deepwater Horizon oil spill in 2010 as well as diversification because I had not acquired any oil or resource related stocks before this.




Pfizer (PFE)


    Recently, I became interested in further diversification of my portfolio and decided to get involved with research and pharmaceuticals.  Their price-to-earnings ratio is currently sitting low at 12.80, which could indicate that stock price is low in relation to their earnings.  This paired with the historical dividends that Pfizer paid out has led me to acquire a small position in Pfizer.  I plan on keeping an eye on this company in the next year or so to decide on whether I want to stay or look to other potential pharmaceutical industry candidates.

Fiat Chrysler Automobiles (FCAU), Twitter (TWTR), and Mitsubishi UFJ (MUFG)
    These are all potential growth stocks that I have gotten involved in for personal reasons.  I just enjoy holding a piece of these companies and probably will not trade them off.  I primarily will continue to deepen my position of the income stocks I have listed above until I decide to trade them for other income stocks, however, want to remain invested in some growth stocks that I just like having a piece of.  I acquired them all because of different reasons and don’t intend to trade even if they perform poorly apart from maybe Twitter.

    Twitter was not able to make its quarterly earnings recently and has since suffered.  I was able to take advantage of this by getting deeper into twitter at this time relatively low, and I have faith that they will be able to turn it around.  Part of my reasoning for supporting Twitter is that I have recently committed to learning more about using the platform myself for this blog.  It just feels right to have a position in the platform.




Stocks I am Watching


    Everyone has a wish list and a watch list.  I really support Elon Musk and what he is doing with SpaceX and Tesla.  Currently SpaceX hasn’t made an initial public offering of its stock, and I am already holding a position in other automobile related stocks.  I have been pondering on the idea of trading them off for Tesla stock, however, I would be sacrificing a pretty significant portion of my dividend stocks if I did for a relatively small position of Tesla, currently a growth stock.

    I have kept a close eye on the giants Microsoft and Facebook as well.  Microsoft has been proven as a sustainable income stock with valuation over the years, and I am incredibly interested in getting involved with the technology superpower.  I have also been watching Proctor & Gamble as well as the ETF Vanguard.  The last two stocks that I have on my watch list are Bank of America and Johnson & Johnson.  Both are attractive income stocks that I am looking to take position in but haven’t found the time to strategize my involvement.




Conclusion


    Whether you are a leader or interested in business, want to use stock investment as a vehicle for savings, or growing your money, I believe that being a part of the public financial world is very beneficial.  Aside from potential financial success, it feels really good, and it is really fun.

2 comments:

  1. Looks like that you have really invested some time in learning this (pun intended). After reading some of your thought processes you are goading me into taking a more serious look and learn a little more about it. The only thing I have really done is the standard 401(k) and yes quite boring and not really making any real progress. Also have an account with Robinhood but havent made much progress there either. One day I gain but most I lose. But everything I have I am holding. Then I realized I dont even know how to place a basic sell.
    Thanks for the article!

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    Replies
    1. Goad,

      Thanks for taking the time to read and reply to this. I did very much enjoy your puns. To sell in Robinhood, select the stock you own on the right hand side of your screen. There will be a brightly colored button that says "TRADE". Once you click on trade, you can select buy or sell and enter the amount of shares you which to do either with.

      Keep in mind that your order will be executed in order, at the current trading price. There are some tricks you can use to make sure that you don't somehow buy too high or sell too low due to fluctuations, however, if the market is currently active when you are making the order, it is almost always instant from my experience.

      =) Let me know how this works for you.

      Josh

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