Well Rounded Investor

My journey of becoming financial independence by 35 years old

Catching the Falling Knife

Last year, I bought BABA as I believe the giant internet companies is only in its early stage of growing. The price increase from $90 to $120, then back to $80, and now settle around $82-$86. It will take awhile longer for baba business to profit. Keep in mind that the company is actually making a profit each quarter, compare to Amazon, whose is bleeding money each month and the price of Amazon is $3xx.xx. Baba is not paying a dividend, I want to have about 10-15% of my portfolio to have some growth stock.

Today while the market was falling 0.4%, lumber liquidator fell 20%. Down from Its year to date and all time high -50% and -75% respectively.

bounce-support

1. The news LL was selling toxic chinese laminated products was causing the initial sell off in March. Since then, the company has stopped buying from Chinese suppliers, and using Europe and North America supplier.

2. LL said it is facing $10m lawsuit and the surprise quarterly loss was shocking the traders.

3. It would probably get worse for LL before I’d get better, but I don’t mind coming in at 75% down from it’s all time high while the company is fixing the issues. I might average down of the stock falls below $15, otherwise I’ll ride this out. As the housing market heat up, construction suppliers like LL will benefit from the boom. It will take a few years for LL to get its reputation back, but lowes or homedepot or other people off craigslist or small suppliers might have done the same thing as LL.

With the that said, I also made a three other purchases:

I purchased 44 shares of LL at $26.9x

I also bought 10 shares of JPM at $62.xx , it will add $17.5 per year in dividend

10 shares of PFG at $52, it will add $14.4 yearly dividend

10 shares of COF at $81.05, it will add $12 to my yearly dividend income

3 shares of F, it will add $1.2 to my yearly dividend income

Ford was down due to the recalls, I’m looking to continue to average down. I love American companies. The Ford trucks are durable, and they are symbol for powerful working trucks. They have gas saving cars to diversity their products line. So why not?

This will add $64.1 to my yearly dividend

While $46.1 is not a lot. 10 shares of each company seem to be small, but I don’t have to put any effort to earn the money. This is totally unearned income, that I’d get taxed very little 0-15%. Let’s face it, America’s taxes system favors business owners/stock shareholders over workers. This is why passive income is so important and so good.

This is the very reason to build a mini finance ETF, I am long financial companies. It also extra nice when I don’t have to pay commissions for any of the purchase up to 100 trades/year. Since mine is resetting in May, I’d like to take advantage of the free trade allotment. I only traded 51 of 100 trades this past year.

This weekend will be very busy for me, I’ll be coaching a soccer game on Saturday. Sunday, I’ll work for my co-worker. I’ll have the Monday off to play the Annual Classic Golf Benefit event. We got -8 last year as a team. We got beaten by a team of old men, they are rich, so they bought a lot of mulligans. Ha! That was the whole point of the tournaments, the more mulligans you buy, could lead to better shot, and increased the charity donation. It was a win-win situation.

There are a couple of badminton tourneys, but I don’t think I’ll have time for more activities as my schedule is packed. I’ll take time to plan our road trip this summer with my sister’s family. I also need sometime with Mr. to make some changes after I’m done with soccer in June.

What’s about you? What trading service do you use? How much commission per trade do you have to pay?

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11 comments on “Catching the Falling Knife

  1. retiredat50
    April 30, 2015

    Hi Vivianne,

    Nice shopping list and I believe that having growing stock (no dividend) is a very strategy, as quick or longer gain can be made. We are doing it as well.

    Good luck for soccer game and good weekend.

    Cheers,

    RA50

    Like

  2. The Professor
    May 1, 2015

    Congrats on all the buys! Those dividends will just keep adding up and adding up and adding up!

    Like

    • Vivianne
      May 2, 2015

      I would hope so. With the turnover with the duplexes, the rent might fluctuate a little and require some work. But dividend payout is the best.

      Thanks for commenting. Have a great weekend!

      Like

  3. Dividend Dreams
    May 1, 2015

    I like the LL buy. Many don’t, but I think the stock will rebound once the dust settles.

    Like

    • Vivianne
      May 2, 2015

      Today, the same guy who broke the new to 60minutes also shorted LOWES prior to releasing an article saying lowes is using the same suppliers.

      It could be a good new for LL because lowes can lawyer up much better? I’m not sure. What I know is there are millions of millenials aren’t buy houses, as they age, get married and have kids, they might give in. The rent market is getting ridiculous so, at some point the house building industry will continue to be on the rise.

      The stock market might be due for a correction, but new construction is inevitable at some point. I hope it will pay off for the both of us.

      Cheers!

      Like

  4. DivHut
    May 3, 2015

    Thanks for sharing your list of buys and intention with BABA. Everyone is different and for my money I will not invest in any stock that does not pay a dividend. BABA may be an amazing growth stock but I want to be paid to wait and my overall focus with my portfolio is not necessarily about capital appreciation as much as it is about dividend income generation. I use Sharebuilder automatic trades under the Costco plan and pay $2 a trade.

    Like

    • Vivianne
      May 3, 2015

      You are one of the people who inspire me to start the passive income path.

      Before I discover Wellsfargo free trades, I was paying $9.99 per trade at TDAmeritrade, so it was really expensive to just invest $200-500 here and there. I’ll have to check out how the Costco sharebuilder work in case Wellsfargo decide to charge a bunch of money on trades.

      Thanks for sharing.

      Like

  5. humblefi
    May 3, 2015

    >>>>I want to have about 10-15% of my portfolio to have some growth stock.

    I follow the same philosophy 🙂 Thanks for sharing!

    I have set aside a percentage of my investments to fund high growth stocks….like funding a lottery ticket purchase. These stocks have the capacity to score big once in a while, but there is a high risk of loss of capital also. Since these stocks tend to be growth oriented, there will be no dividend distributions from them i.e. they can lose money but they are tax efficient 😉

    But, I stick to tax-managed mutual funds…..VTCLX being my vehicle for the capital growth bucket. I have other vehicles for mid-cap, international and small cap stocks.

    Like

  6. Ted @ Inequality Today
    May 18, 2015

    I’m not sure about alibaba. I’m no fan of Chinese accounting, and even if alibaba does turn a profit I’m not sire it’s worth $200 billion.
    I use an online broker that charges a $8 flat rate per trade no matter how many shares I buy or sell.

    Like

    • Vivianne
      May 18, 2015

      Thank you for commenting. Chinese accounting, and even inside trader is difficult to track. Not to mention Gucci is now suing BABA for knowingly letting companies selling counterfeit on their market place. Mark Cuban expressed it once in CNBC interview and he hold quite a bit of BABA. I personally think he’s an excellent investor, he has a nose for success. Also, with BABA holding 75% of china online business, I remain bullish/hold on the stock for now.

      I’m super happy to see readers keep me on my toe about my investment choices.

      I’ve been reading your website. I’m happy to find that you are an optimist (same trait that mr Buffett has).

      Thanks again for visiting. Goodluck on future investment!

      Like

  7. Pingback: Well Rounded Investor Portfolio Update + $18,671.83 | Well Rounded Investor

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