Hi my dear blog readers. As you probably noticed I was inactive for some time now. Main reason was total lack of time due to our little one taking all of my spare time 🙂 Sorry guys she is my little priority. But now that my wife and my daughter have went to visit her sister in Ireland for a week I have lots of spare time and some will spend here warping up what was cooking in our journey to financial independence.
First thing first – changes in our investment portfolio. Yes you read it right I have decided to divest some of our portfolio due to my personal fear that Brexit will trigger a global recession. You have probably read about My thoughts on BREXIT so this was a rational step for me to take since I already have bet on hard Brexit in end of January. 2 months has passed and guess what – no deal is signed and UK and EU are playing blame-game who will be guilty for no deal Brexit. So what was our steps:
- I have put all of our II and III pension investments into safest extra boring least risky funds. They are 100% bonds of something like that as I’m waiting for market to crash in case of no deal Brexit materialize. For now the market has rallied, I have lost few % of growth, but at least I sleep well. In the end I think that shit will hit the fan in next week, maybe a month or two if UK and EU will manage to agree on S/T prolongation.
- At end of January I decided to sale my Baltic holdings that I consider least safe investments and companies that are not so good performing:
- Apranga – last dividends 7,7 EUR (after tax). Sold for 85 EUR, bought for 148 EUR, Net result -63 EUR (incl. commissions)
- Vilkyčių pieninė – last dividends 9,9 EUR. Sold for 205 EUR, bought for 151 EUR, Net result +54 EUR.
- Tallink – last dividends 17,3 EUR. Sold for 720 EUR, bought for 661 EUR, Net result +59 EUR.
- Merko Construction – last dividends 17,9 EUR. Sold for 191 EUR, bought for 149 EUR, Net result +42 EUR.
- Klaipėdos nafta – last dividends 16 EUR. Sold for 174 EUR, bought for 200 EUR, Net result -26 EUR.
- All of these shares were bought more or less at end of y2014 so I held them for ~4y. During these years they paid me quite nice dividends but my decision was to say good bye. 4 of these position were bought for small 150-200 EUR amounts, so I decided to sell the small positions and have larger ones. All in all end result was +66 EUR (incl. commission) from invested capital of 1,3 kEUR so that is 5% return, or somethings 1.2% annualized ROI. At least not a negative one and I received something around 4-5% dividend yield from these companies during the 4y that they were in my portfolio. So this transaction increase our cash reserve by 1,4 kEUR, but decreased our forward estimated dividends by -69 EUR. That is quite a amount, but I see some risk that these dividend income might be gone in case of recession and these holdings would be sold for 2-3 times less. Now my investment had even some micro return.
- Next I turned to US positions and looked trough my positions that generated the lowest dividend yield and had increased the most and 2 positions stand out:
- Intel – I have bought into this tech giant back in 2017-03 with 17 shares for 35,3$ paying 610 USD (incl. 9,95 USD commission) Now the share price has climbed a lot recently by +32% to 52,8$ and I have sold the position in 2019-01 receiving 808 USD. Net result +198 USD. Annualized ROI stand at 18%. This position has generated us just 14,3 USD/p.a. (after tax) dividends with just 1,7% yield on current market price, so sale trigger was obvious.
- Proctor & Gamble – One of my last purchases was increase in of PG position by 8 shares in 2018-06 for 77,2 USD/share paying 627 USD. Now that the price of PG has climbed by +27% in 2019-02 (just 7 months!) to price of 98$/share I decided to decline the position back and 8 shares were sold receiving 774 USD. Net results +147 USD. This was a great investment with a annualized ROI of 46% (!!!), bitcoin like return :D. PG generated 16 USD/p.a. dividends. Yield on market value was 2,1%. Bit low and visibly lower then 2,6% that I have bought in when PG was traded for 77 USD/share. Either way the sharp growth in share price and borderline dividend yield close to 2% was the trigger for decrease of PG holdings back from 15 share to 7 share. I know I know that’s not how DGI investors work, but I will sleep better with some cash in my hand and sale of some of my most increase positions, taking the profit now and looking what will happen next in the market.
- Sum result of these 2 sales was +345 USD (annualized ROI 23%) and increase in cash reserve by another 1.6 kUSD. Dividends loss after these transactions was -30 USD that makes only 1,9% dividend yield, which in general make no seance to have as I pay 2% interest for my car leasing. It is more safe to use the capital just to repay the debt as share might go down and dividends can be cut despite the long history. Nothing is permanent in this world you know 🙂
All in all these transactions has increased our cash reserve by 2,8 kEUR, which is a bit cheating but i’m going to be fulfilling my Y2019 Goal #2 – Accumulate 5 kEUR in cash. On the dividend side we lost -96 EUR of dividend income, but I will feel much much better knowing that I have sold most risky and most increased positions in my portfolio and I know that I have earned ~370 EUR just by buying and selling these mentioned positions. So this is my moves in 2019 Q2. Lets see how the future will unfold, but I hope that my steps were right. If i’m wrong, then still I have good load of cash. Unearned market price increase is not a loss. If we go with what could have been, then we end up in Science fiction field 🙂
I have a real feeling that something will happen soon. Not the nightmare that was in Y2008, but something somewhat less, but still bad. Winter is coming, brace yourself 😉 What do you think about my moves, Brexit and Global economy?