Proctor & Gambling

We're talking about PG's selloff of a lot of its brands, and the impact that had on stock price. We bought some shares of PG before the divestiture, and since then the stock barely trended upward (about a 1% return). So, does this mean their selloff was good for profits? They only reduced their sales by about 15%, even though they sold off 95 of 160 brands. This made them a leaner company. This was supposed to make them more profitable.

We bought PG as a proxy for the whole the consumer staples sector, which would bolster the overall stability of our portfolio. We were betting that it would mirror or do better than that sector. Although that didn't really happen (a few of their competitors in the sector outperformed PG), it didn't do much worse. It has been pretty stable. Looking back, we missed some opportunities to make more, but it would be nearly impossible to know that at the time.

As a side note, it didn't hurt that PG pays dividends. Their dividend yield is 3.2% of the stock price, which isn't bad. This means that we get 3.2% on our investment each year.

PG wasn't selected because we thought a selloff would happen, and then it happened, and it didn't really do much for profitability. So ultimately, even though the stock didn't increase like we were anticipating, dividends saved us again. The stock price didn't really go up all that much, the dividend yield didn't change, etc. This is just another case of the market being unpredictable and not necessarily rational.

Last week we talked about doing a purchase of SPY. As you can see, it has been steadily going up, which gives us a little pause, because there's always the worry that we're buying it at or near a high, and it can only go down (see EWZ). Of course, that risk is always present, but the other side of that is we DON'T know, and it could go up. SPY has been a good, steady investment for us, nothing flashy but consistently growing. In the past we have decided to set our buys automatically at 1% below the current price, so we can get a little bit of a profit bump. This isn't foolproof, but it has worked for us for a while. Buying SPY at a 1% discount would cover our trading fee. The big thing here is to try not to be greedy. If you want your buy to go through, don't get greedy with it. Sounds a lot like buying a house.

After this buy, it would be interesting to try something smaller, say a small stock or a single company. Go through the research process, just like you used to do in school. It might be fun. We've been playing the stock market from a very macro sense, big funds representing sectors or countries, with an eye toward keeping everything in balance. Then there was AT&T, which we bought for dividends or PG, as a proxy for a sector (more on all those here).  The point is, we're still trying to find ways to get some educational benefit. The nice thing is that we have enough invested that we aren't in danger of losing everything. The macro approach has been good for us, but it would be good to try out the more targeted approach, however impractical it seems. We have to keep in mind that this is really an educational experiment.

As a side note, in 2014 PG sold off a lot of their brands, and we could learn something from taking a look at the long term effects of this.

Profit.

Treat Yo Self

The word on the street is that the Fed is thinking about raising interest rates, since the jobs numbers have been better. That could mean things will be cooling down a bit. Eventually they will, of course, so then we can invest in candy and cosmetics to rot our teeth and look good for the party at Ground Zero. These investments tend to do well during a down economy. The idea is that you can treat yourself to these comforts, even when the world is falling apart around you.

Also, we're headed for another buy, so we need to consider our next move. It was noted that we have never bought any bonds, and there may be something to be learned from a non-equity buy. Also, we haven't done any commodities. If only we could figure out the McRib cycle. One problem with buying a commodity is that it would mess up our diversity, since our portfolio is so small.

We've always been concerned with diversifying our portfolio, and one of the original purposes of this group was education. Maybe we need to focus on the parts of this that we don't yet understand, rather than continue our march towards the perfectly diversified portfolio. Before our break we did spend some time looking at a single company. We ended up going with Proctor & Gamble (and we purchased AT&T in the past). WIth both PG and T, we purchased them as proxies for other things (sector, dividend). We didn't pick these up as growth engines, but rather for their stability. The next step may be developing skills for selecting something that we do expect to grow. Another idea is to focus on building a good retirement fund, with bonds and treasuries and the like. Either way, we should take some time looking into non-equity (stocks) investments.

ENZL and EWZ basically still cancel each other out.

SPY is still up significantly from where we picked it up, even though in the last few days it has dropped a bit. Every drop makes people think its the end.

VPU, NORW, and PG are basically being stable. Mission accomplished on those.

T is still up more than we expected.

Hey, we noticed this article linked on our sigfig account. It's pretty interesting:

P & G to shed more than half its brands

This adds to our knowledge from reading the annual report. From that, it looked like PG was trying to get more diverse internationally, and now they seem to be trying to get rid of stuff that isn't overwhelmingly profitable.

Profit!

Looking at the Home Despot

In the near future, we're going to have a slightly more experienced investor to take a look at our portfolio and offer some suggestions.

We're buying 6 shares of PG this week, and we will have another buy about ready soon.

We still want to invest in some Consumer Discretionary and some sort of Tech.

Taking a look at Home Depot, we found a few articles. The first one is a bit confusing, what with all its statistics and number stuff. The second one is a little friendlier. There was yet a third article, and this one focused on dividends with Home Depot and Lowes. As a reminder, dividends are the dollar value paid out for having a stock, whereas a dividend yield is the percentage payout. As the price of a stock increases, the dividend by default doesn't change. This would lower the yield, since a fixed amount would be a smaller percentage of the value. Home Depot has increased the yield to keep up with their increasing stock price, which is nice. Home Depot probably increased the dividend to attract more investors, which in turn increased the price. However, there might be a bit of a chicken and egg scenario going on here. The point of all this is that there seems to be some potential with HD, however measured, and it might be a viable long-term investment.

Oh, and here's another article.

Profit!