In some ways investing recently has been pretty easy, anything you have bought (almost) goes up – and usually goes up a lot. But when looking for bargains to invest in, it just keeps getting more and more difficult in my opinion.
Apple’s most recent earnings report was spectacular. However, unlike when similar things happened 8 years ago, when such great news allowed you to buy a great company cheaply even after great news now Apple went from an already pricy level and added 10% to that the next day. And it has continued to go up. Apple is by far my largest holding (given how expensive it is, a fairly crazy 25%). So I do still like the company long term, but I have been selling a bit the last year (though not nearly enough to keep it from dominating my portfolio more and more).
Years ago it was easy for me to buy Apple and be very confident I would do very well over the next 5 to 10 years. Now I am more hopeful than confident. And one reason why I continue to hold so much is I don’t see other great buys.
In the last 6 months I did make a big buy of Sea Limited ($SE) a company based in Singapore with large gaming, internet commerce and emoney interests. They are especially focused on South East Asia. I bought a lot of this quickly and that has proved wise (at least so far). I made it my 3rd largest holding (Alphabet is 2nd) very quickly and I am up over 100% already. It is speculative. But given my options it seemed like a great opportunity. I would have been much slower to increase the size of this position if I had other options I really liked.
Overall I am going much more into cash as a safe haven than I have before. Normally I am extremely overweight stocks. Even today I am still overweight stocks compared to the conventional wisdom (and the only bonds I hold are Series I USA Savings Bonds (which are actually a good investment option, though you are limited to buying $10,000 per year).
While the markets are giving investors great returns finding good buys is becoming more and more difficult (at least for me). For example, my 10 Stocks for 10 Years (2018 version) has done very well. But several of those stocks are much less a bargain today that they were. Apple is up from $225 to $450. Danaher from $103 to $206. Amazon from $2,000 to $3,150. Tencent from $43 to $68. Alibaba from $175 to $256. The only stock down is Abbvie, from $97 to $95 (though with dividends, it yields 5% now, it is up a small bit). Abbive seems like the rare bargain to me today. While there are short term risks Tencent and Alibaba also seem to be priced reasonably and offer good long term potential.
I think, my post, Long Term Changes in Underlying Stock Market Valuation, provides insight into the challenges of consistently finding the type of values today than was possible in previous decades.
Related: Investment Options Are Much Less Comforting Than Normal These Days (2013) – Retirement Portfolio Allocation for 2020 – Tucows: Building 3 Businesses With Strong Positive Cash Flow