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 Five Updated January 2022

Portfolio Five is 12 years old.  The beneficiary contributed $6500 and the trustee $13,000 for a total of $19,500.  The current value is $40,195 for a gain of $20,695 which is 106% or 9.9% / year adjusted for the timing of cash flows.  Go here for a summary or to the link on the left.

This year we had three sales – Alibaba (BABA) for a small gain, Sumo for a small loss, and Baozun (BZUN) for a larger loss.

We purchased 6 new stocks – Appian (APPN), Activision / Blizzard (ATVI), Intel (INTC), Snap, Block (formerly Square) (SQ), and Tesla (TSLA).

Generally the portfolio has been doing well.  There are 19 stocks in the portfolio and it is quite diverse.

Recently we’ve seen declines in some former high flyers Cloudflare (NET), Paypal (PYPL), and OKTA (OKTA).  We saw some new highs with Infosys (INFY), Union Pacific (UNP) and Procter and Gamble (PG).

July Stocks to Consider

The following 16 stocks (plus gold) have been solid in our portfolio and are recommended for consideration if you don’t have them or wish to add more.

  1. Accenture (ACN) – well run consulting company growing and also acquiring smaller companies in niche areas
  2. Alibaba (BABA) – Chinese Amazon equivalent has been battered by regulators but seems to be turning a corner, still enormous and critical to their economy
  3. Cloudflare (NET) – an innovative, fast growing tech company with a service for internet connectivity and security
  4. Electronic Arts (EA) – Major video game firm in a giant and growing industry
  5. Facebook (FB) – Fast moving and innovative firm seems to have minimized regulatory scrutiny and can monetize world-wide
  6. Gold EFT (IAU) – an ETF that tracks the price of gold, traditionally a hedge against uncertainty
  7. Kraft Heinz (KHC) – a global food and beverage firm that has reworked its operating model after recent underperformance
  8. Mastercard (MA) – a well run player in payments
  9. Nvidia (NVDA) – a rapidly growing player in chips and innovation
  10. OKTA (OKTA) – a well run enterprise software firm
  11. Paypal (PYPL) – a growing and innovative payments provider
  12. Procter & Gamble (PG) – iconic consumer product firm
  13. Starbucks (SBUX) – ubiquitous coffee shop pivoting post pandemic
  14.  Tesla (TSLA) – high priced but rapidly growing electric car firm led by Musk
  15. Taiwan Semiconductor (TSM) – global chip producer that continues to perform well
  16. Union Pacific (UNP) – well run US railroad

Other US companies to look at for July, 2021:

  • Fiserve (FISV) – Fiserve provides services for payments and banks and is well run and has grown for many years
  • Chevron (CVX) – While Exxon-Mobil (XOM) led the US oil and gas industry for years, Chevron has been rising and moving faster and has a very similar market cap today
  • Snap (SNAP) – the company continues to attract users and innovate with video which continues to grow in advertising impact

Other foreign companies to look at for July, 2021:

  • ABB (ABB) – ABB is a global leader in engineering and electrification, which will grow as the world seeks to move from carbon energy sources
  • Pinduoduo (PDD) – Pinduoduo has an innovative commerce model for aggregating buyers and has had incredible growth in China
  • L’Oreal (LRLCY) – L’Oreal is the French makeup firm which has responded extremely effectively to the pandemic and gone extensively digital