Friday File: Buying Growth, Selling Mistakes… a Wild Week in the Real Money Portfolio

By Travis Johnson, Stock Gumshoe, November 9, 2018

There was an election on Tuesday, I hear. I voted. The counting is almost over now. Apparently the world did not end, and now we begin the campaign for the next election… everyone raise their hand who wants to vote for austerity and deficit reduction and lower spending and higher taxes and delayed Social Security retirement benefits!

Is this thing on? Anyone? No?

OK, then I guess we’ll stick with politicians who promise all gain and no pain, and we’ll wait to see if the other shoe ever drops. Not a single candidate that I heard mentioned “deficits” as an issue, despite the fact that higher interest rates and higher debt levels are going to destroy the federal budget even before the oft-teased “infrastructure bill” comes around… so I continue to take some comfort in owning stock in powerful companies that have strong pricing power that can help them survive through possible inflation… and in having a meaningful allocation to gold in case the dollar eventually shows the strain of that debt.

But with the meat of my portfolio, I don’t make the mistake of believing that I know what the future will hold when it comes to politics or macroeconomics… I still just keep buying companies that look appealing based on my understanding of their current financials and their future opportunities, and selling those that I got wrong, so although my cash balance actually increased a bit on the week there’s quite a bit to report on for the Real Money Portfolio: I took some profits on my most successful recent speculation (Starbucks options), added to a few stocks that dropped after earnings (TTD, PINC, TDOC, QCOM), in some cases for no good reason, and sold a stock that I’ve been wrong about for too long after it issued another disappointing report (SWKS).

So… details:

I sold about 40% of my Starbucks (SBUX) call option position (January $60s), though I still hold the rest — mostly because I’d be willing to exercise those calls if the stock remains in the $60s in January, but that’s about as large of a position as I’d be willing to put on in this stock right away (SBUX is currently a 2% position in the portfolio, it would rise to about 5% if I exercised my remaining calls). We’ll see how it goes over the next couple months, but ...

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