Homeless Jerry, I do not like it when readers sound off in the title, but remember I said this is a 5 year, 10 year or 20 year plan the are no quick fixes If you want to continue putting your money in Bitcoin, bet on the horses, or visit Las Vegas I won't stop you. Before I start this article I already know we are loosing based on the stocks I looked at but this is why this is a 20 year plan not a 1 1/2 year; you suck William plan.
"I am homeless now and you left me broke!"
No, Jerry you were homeless before you ever started reading my blog. I am here to teach you about the basics of Wall Street, the basics of investing and how to get smart with money. People like Clark Howard, Dave Ramsey, Susie Orman, Warren Buffett and William Greider all understand one principal if you want to make money you must follow basic economic principals.
"Your stocks suck!"
I am not a licensed Financial Advisor all of the stocks I spoke about also carry a disclaimer to invest at your own risk and seek a licensed Financial Advisor. I built this mock portfolio to teach you how Wall Street works not to be giving financial advice, however each of the companies are solid at least at the time they are added to the portfolio. Now with that being said let's take a look at that portfolio, I am not going into why each particular stock was chosen; for that you will have to read my previous articles but these companies are:
Alibaba (BABA) = $186.41
Nvidia (NVDA) = $179.00
ResMed Inc. (RMD) = $103.05
Amazon (AMZN) = $1405.32
Alison Engines (ASLN) = $41.89
T Rowe Price (TROW) = $120.59
Iqiyi (IQ) = $29.62
Washington Real Estate Investment Trust (WRE) = $32.60
Investor Real Estate Trust (IRET) = $58.10 (1 for 10 reverse split we purchased at $5.81)
Nike (NKE) = $82.20
Unilever (UNA-NL) = $47.74
Total = $2,286.22
Now for our purposes mentally we are throwing out, WRE, IRET and that we lost on the share price, because we bought them solely for dividend purposes so the loss of share price not important, until we lower our cost basis later on.
Stock Gain or loss as of December 31, 2018:
Alibaba (BABA) = $186.41 / $137.07
Nvidia (NVDA) = $179.00 / $133.50
ResMed Inc. (RMD) = $103.05 / $113.87
Amazon (AMZN) = $1405.32 / $1501.97
Alison Engines (ASLN) = $41.89 / $43.91
T Rowe Price (TROW) = $120.59 / 92.32
Iqiyi (IQ) = $29.62 / $14.87
Washington Real Estate Investment Trust (WRE) = $32.60 / $23.00
Investor Real Estate Trust (IRET) = $58.10 / $49.07
Nike (NKE) = $82.20 / $74.14
Unilever (UNA-NL) = $47.74 / $47.42
Total Loss: $2,286.22 - 2231.14 = $55.08
Now remember a lot of these stocks pay dividends so the loss is really around $35 - $45 not $55.08 but I can live with the $55.08 loss for our purposes rather than calculate the dividends it won't change the percentage that much.
The Dow Jones Industrial average was at $24,824.01 on January 2, 2018 it is currently at $23,327.46 down $1496.55 a loss of 6%
My Portfolio is down: $55.08 a loss of 2.4%
So the reality is Jerry you lost $50 not your shirt although maybe you did since you can get a couple shirts for around $50 bucks! However I outperformed the market by 3.6% plus dividends. This is not the time to sell off any of the picks in the portfolio (except 1) it is a time to buy, so for our purposes we are going to buy an additional share of each of the stocks combining the 2 prices and then averaging the cost this is our new cost basis.
The reality though for IRET we would have been cashed out on the 1 for 10 cash split so we would have 2 buy 2 shares of it so we can complete our model but we are going to drop it since a reverse split is a sign of financial trouble and we have lost on the share price. In real life we would only buy an additional share of those stocks that have lost money not the winners but we are doing it here so we know we have 2 shares of each stock and keep the model simple.
New Cost Basis (2 shares each):
Alibaba (BABA) = $161.74
Nvidia (NVDA) = $156.25
ResMed Inc. (RMD) = $108.46
Amazon (AMZN) = $1453.64
Alison Engines (ASLN) = $42.90
T Rowe Price (TROW) = $106.45
Iqiyi (IQ) = $22.24
Washington Real Estate Investment Trust (WRE) = $27.80
Nike (NKE) = $78.18
Unilever (UNA-NL) = $47.58
Total Investment: $4410.48
This year we are looking at a recession in the US for first half of 2019 (see previous article I stated this was so for April 2019) and a global economic downturn. Other signs that make this period pretty scary is the lack of companies borrowing money or buying high risk low graded bonds. This does not look bright for Banks, Commercial Lenders, Real Estate, or Home Builders.
Donations: Paypal: firstname.lastname@example.org this is meant for entertainment and educational purposes only investments and purchases are your choice and I always recommend speaking with a licensed financial advisor before making any investment decisions.