Markets are falling, just ignore it

 

TFC asked me to share thoughts on whether investors should let some falling counters go or go bargain hunting, so I wrote a short blog post.

First off, my portfolio has been getting slammed recently, largely because my tech counters UMS, AEM, and Frencken gave back their fantastic gains this year, so much so that I've lost six-figure gains. You can see the pain my full portfolio is going through.

I think the second-best thing to do during a downturn is to just ignore it and calmly collect dividends. 

The best thing to do is to nibble the markets on the way down, as most of us have no idea how long the downturn will last.

My biggest personal loss in the past few weeks is UMS. 

My relationship with UMS spans decades, as I first bought it when it was less than 46 cents. Historically, UMS was a high-yielding counter, as investors were wary of its single customer. It has since paid solid dividends and even issued bonus shares multiple times — I left the stock alone because why interrupt a good company when it is making money for you. 

The AI revolution changed everything, and along with Frencken and AEM, UMS became a growth counter which really had no place in my portfolio.

In fact, I was quite disturbed that the counter became very much overpriced due to the AI hype and started selling above $2.70. I sold about 1/3 of my holdings and moved into a mix of REITs and Banks when the crash occurred. Then I started buying back below $2.20, selling the REITs and banks with minor losses but getting UMS back at much larger discounts, while getting cut by a falling knife, but I'm happy to return to that status quo. 

Right now, I'm buying back UMS with my dividends, hoping to get back to the number of shares I had before the crash. But the road south is long, and I'm not surprised I'll get some units below $1.50.

After the COVID REITs crash, I stopped really caring about my portfolio. Because of my age, I've stopped using leverage, and my expenses are less than half my dividend income. My teaching gigs can cover my mortgage.

In fact, I'm blogging from Genting Highlands right now, from an Onsen Hotel and reading a book by theologians on the nature of wisdom. 

Yes, markets can certainly drop further; my portfolio has a 10-year drawdown of 33%, but it needs to fall so I can bargain-hunt. 

So just make sure you can pick something up if the market bottoms out.