Stocks To Sell September 2022

These portfolios are medium to long term in nature. That means we typically do not make quick sales in response to market conditions. But it is time to re evaluate these stocks given all the changes since covid and these stocks we are going to sell or strongly consider selling as a result.

  • Vanguard Total Market Bond Index (BND) – with short term cash returning almost nothing, it seemed to make sense to look at the BND ETF as a chance to get a little more yield (interest) on cash with not a lot of extra risk. However, BND has fallen 15% with the rise in interest rates impacting the value of bonds and this is not a good place to park short term money
  • Appian (APPN) – the low code SAAS software company briefly had a price boom with other automation software companies and then fell back to the IPO price. The company is not yet profitable and does not have rapid growth. It is not a bad company and recently won a big lawsuit and damages against the competitor PEGA, but does not seem to have significant upside
  • Activision (ATVI) – Activision makes video games and is currently in the process of being acquired by Microsoft, which has stabilized the price. If the acquisition falls through due to regulatory barriers, the stock will likely fall in price. Given the situation it makes sense to sell
  • Alibaba (BABA) – Alibaba is a Chinese e-commerce giant that also owns thriving financial firms. But trouble with the Chinese government has led to a crackdown and the market in China is just very difficult for stocks and as a result it results in a sell recommendation, even though this is a powerful and seemingly well run company
  • Intel (INTC) – despite a historically good market for chips (the entire supply chain was brought to its knees due to lack of chips), management errors and poor execution have caused this company’s stock to drop significantly. With no near term catalysts on the horizon it makes sense to sell
  • Pinduoduo (PDD) – Pinduoduo is another massive and innovative Chinese e-commerce company that has been heavily damaged by government challenges. As such it makes sense to sell
  • SAP – SAP has a strong franchise in Enterprise Planning software but has struggled with a migration to the cloud and delayed meaningful integration of its major acquisitions. It is also hurt by the rise of the dollar since it has significant overseas revenues. Until management regains credibility and proves it can execute likely it is time for a sell
  • Snap (SNAP) – Snap was seriously impacted by the changes in privacy with do not track driven by Apple and iPhones and the rise of TikTok. The stock is down tremendously and the company is taking aggressive actions including shutting down some products and reducing staff in an attempt to survive. Given this, it is time to strongly consider selling. On the other hand, this also may be a decent price point for entering the stock if you feel that they can survive and / or get acquired by someone who could leverage their large and active user base
  • Block (SQ) – formerly Square, Block is the payments company that serves all the small companies with the card readers as well as owning the Cash App, and also having a major bitcoin presence. The stock has cratered as all these businesses hit the wall and it is time to consider moving on
  • Rocket (RKT) – Rocket is a company that sells mortgages and is a major player in this space. However, the mortgage business is collapsing as interest rates rise and home values fall and the company is going from large profits to likely a net loss. On the one hand, Rocket is going to be a large player in consumer financing and mortgages for many years to come if they can survive the downturn (they are well capitalized) – on the other hand, the stock price is down and many lean years are likely to come of limited profits and likely losses. This is hard because it is a well run company – the question is, can anyone invest in the mortgage industry or is it just a short term boom / bust sector (that’s been the historical challenge)
  • Paypal (PYPL) – Paypal has historically been a great stock, rising with the growth in electronic payments, and also owns Venmo. However it recently crashed with the downturn and faces many challenges, including the rise of Apple Pay. OK to sell even if this is a painful call

Sales by portfolio to consider:

  • Portfolio One – Alibaba (BABA), Pinduoduo (PDD), Block (SQ), consider selling Paypal (PYPL) and Rocket (RKT)
  • Portfolio TwoAlibaba (BABA), Total Bond Market (BND), Block (SQ) (discussed and decided to keep)
  • Portfolio Three – none
  • Portfolio Four – Block (SQ)
  • Portfolio Five – Appian (APPN), Activision (ATVI), Intel (INTC), Snap (SNAP), Block (SQ), consider Paypal (PYPL) and SAP (SAP)
  • Portfolio Six – Intel (INTC), consider Paypal (PYPL)
  • Portfolio SevenAlibaba (BABA), Block (SQ), consider Paypal (PYPL) (kept)
  • Portfolio Eight – Block (SQ), consider Paypal (PYPL)

Portfolio One Updated April, 2022

Portfolio one is 20 1/2 years old. The beneficiary contributed $10,000 (net of withdrawals) and the trustee $20,000 for a total of $30,000. The current value is $82,037 for a gain of $52,037 or 173%, which is 8.3% / year when adjusted for the timing of cash flows. Go to the link or here to see details.

This portfolio is down with the others and we can look at a few stocks:

  • Block (SQ) – this is an interesting stock but was hit hard in recent SAAS / payment stock re-valuations
  • Pinduoduo (PDD) – the Chinese tech stocks have been devalued by Chinese government actions, tensions with the USA, and a general re-evaluation of tech stocks
  •  Meta (FB) – Meta’s challenges are well documented as they pivot to Augmented reality – but they still make a lot of profits and have great assets worldwide
  • Rocket (RKT) – we sold half our rocket when they hit a “meme stock” high which is good in hindsight.  The stock pays a strong dividend but is hit hard by the impending raise in interest rates which chokes mortgage growth and refinancing
  • Alibaba (BABA) – like PDD this stock suffered from a triple whammy
  • Paypal (PYPL) – one of the most perplexing on the list, PayPal fell instantly out of favor with analysts after stopping guidance the shares cratered without a significant negative event in the business
  • OKTA (OKTA) – this software company had an acquisition the market didn’t like and then was hit with the overall re-evaluation of software companies valued by growth not profits