May was definitely an active month for me. When I invest, there’s obviously a lot of things that come into consideration. The number one factor I consider is how I believe the company and its industry will fare in the next few decades. While working from home for a few months, I had a lot more time to research a lot of companies, so I have started opening up small positions on some new stocks. May was a hot month for the stock market, and many stocks were approaching all-time highs, which made me slightly nervous to invest large sums in one company. Instead, I only dipped my toes by buying a few shares in them with intentions of buying more on any future dips. This has been made so much easier nowadays with all the commission-free platforms. With that said, my two biggest buys in May were:
- Teladoc (NYSE: TDOC) – 5 shares at $160.61
- Brookfield Asset Management (NYSE: BAM) – 38 shares at $30.44
These didn’t come from just one transaction. These came on several occasions, so I just averaged the price I paid for these stocks. Both of these were new positions in my stock portfolio. I have owned Teladoc before, but I sold it for reasons not related to my opinion on the future outlook of the company.
Back in October 2018, I sold 100 shares at $63.57 (I’m kicking myself) because I panicked from a market selloff. At the time, I had over $30,000 in student loans with another $30,000 coming since it was my first semester in graduate school. Oh yeah, and this was one month after I took on a car loan.
As you can see, I wasn’t making the wisest decisions financially. In hindsight, it’s easy to say that I shouldn’t have sold off my whole portfolio (the Teladoc position alone would be worth almost $20,000 today!), but I’m glad I was able to learn from it and capitalize on the most recent stock market selloff. In another article, I’ll go into more detail of the time I sold off my entire portfolio back in the late 2018 market selloff.
With all this being said, Teladoc is probably one of my favorite growth stocks to invest in. It’s a company with a first-mover advantage in telehealth, which is a sector I think has a lot of room for growth. Basically, it’s a company that allows people to have video conferences with a qualified physician on any device within minutes. The COVID-19 crisis has only sent this stock skyrocketing and for good reason. Total visits in the first quarter of 2020 nearly doubled to 2 million compared to last year. Telehealth has a lot of different tailwinds that will continue to send this stock higher for the long term. Healthcare is multi-trillion dollar industry in desperate need of cost-savings and convenience for consumers. Teladoc does just that.
There are still risks involved. First off, Teladoc is still not profitable. They are reinvesting everything back into the business to maintain growth. The other big risk is competition. While there are advantages to being a first mover, it can also attract the Amazons and Apples of the world who have significantly more capital resources.
The other big buy in May was Brookfield Asset Management. They do exactly what it sounds like they do. They manage assets. They own and operate assets of their shareholders and clients. They focus on real estate, renewable power, infrastructure, and private equity. They also have a footprint all across the globe, making them one of the most diverse companies out there. It also helps that they have been around for over a century, so they’re no strangers to recessions. They are masters when it comes to allocating capital. With this pandemic that we’re living in, they are loaded with the cash to pounce on a lot of assets at attractive prices. Their strategy is basically buy assets at low prices, develop and operate them, and decide whether to keep milking it as a cash cow or sell it at a profit. Rinse and repeat.
I bought up shares of fourteen other companies, but with much smaller amounts (some were fractional shares). Together, they added up to $2,082.25. This list includes:
- Chegg (NYSE: CHGG)
- Vertex Pharmaceuticals (NASDAQ: VRTX)
- The Trade Desk (NASDAQ: TTD)
- Medical Properties Trust (NYSE: MPW)
- Bristol Myers Squibb (NYSE: BMY)
- Alphabet (NASDAQ: GOOG)
- Amazon (NASDAQ: AMZN)
- Logitech (NASDAQ: LOGI)
- Paypal (NASDAQ: PYPL)
- Nvidia (NASDAQ: NVDA)
- Microsoft (NASDAQ: MSFT)
- NextEra Energy (NYSE: NEE)
- Zoetis (NYSE: ZTS)
- Livongo Health (NASDAQ: LVGO)
I would classify all of these as growth stocks, with some riskier than others. You really can’t go wrong with Alphabet, Amazon, or Microsoft. But there are some companies that are not profitable yet such as Chegg and Livongo Health. These stocks are relatively volatile, so don’t be all surprised to see big, sudden drops north of 20% in a matter of a few days. They are definitely not for the faint of heart. In the next few months, I plan to reduce the overall volatility by investing in safer and more established companies.
My main selling was just some Vanguard ETFs. One was an S&P 500 ETF (VOO) and the other was the Vanguard Growth ETF (VUG). These sells combined for about $1,800. I’ve started to become more of a hands-on investor, so I felt like putting this cash more towards growth companies.
I’ve seen headlines of Robinhood users investing in companies like Hertz. You know, the company that is going bankrupt. If you’re wondering how this makes any sense, it doesn’t. Even the company Hertz themselves said that the stock is probably worthless. Yet somehow there is demand for the stock that pushed the stock up over 10x its low. People are looking to get in on these short-term gains. The fact is that this stock will become worthless and you don’t want to be a shareholder when that happens. Investors essentially are paying off the company’s debt. I feel like this needs to be said again. Invest for the long-term. Stop trying to get rich quick. Get rich by investing in good companies with a vision for the future.
I’ve recently started studying for the CPA exams, so that has taken a lot of my time. I will keep up with the net worth reports because I find it fun to update every month, but I won’t be posting too much until I finish and pass all the exams.