[US Stocks] From correction to crash level. Entering a bear market signals a buying opportunity.
Hello, I’m Lehman (@Lehman1980).
Normally I contributed every other week, but as I see the market in a heightened panic,
I’m creating this article to summarize my current thinking.
Compared to the closing price on March 6, the close on March 13 is down about 8% (weekly).
Market remains highly volatile compared to last week,
Based on the previous rules, I have partially cut losses.
＜S&P500 Index＞
https://jp.investing.com/indices/us-spx-500-historical-data
This is the SBI Securities account summary (as of March 13 close).
Current unrealized loss is as follows, and the cumulative P/L including realized gains and dividends is$9,800 loss.
Last week’s buybacks were premature and a failure, as expected.
Stocks traded
Sell: BTI, CMCSA, NGG, PFF, RDSB, SPYD, VTI
Buy: VT
Current loss-cutting rules
Individual stocks: if unrealized loss exceeds 6%, sell about 50%.
This week, I reluctantly cut losses on the following.
I sold all of CMCSA and VTI.
I nearly sold BTI, NGG, PFF.
RDSB & WBK will be sold gradually.
Attractive dividend yields from ETFs
With the losses, I have about $380,000 to allocate gradually into purchase funds.
Originally I allocated about 70% to ETFs, but high-dividend ETFs have become even more attractive, so
I plan to gradually pick them up using limit orders, focusing on the following.
PFF: $32 per share. If annual dividend is $2.10, that’s 6.56% per year.
SPYD: $26 per share. If annual dividend is $1.70, that’s 6.53% per year.
VT: $65 per share. If annual dividend is $1.80, that’s 2.76% per year.
Summary
It is not yet clear whether the S&P 500 has found a bottom around 2,500.
Rather, even after the market settles, it seems likely to enter a bear market with continued low stock prices.
Until the end of this year, it’s probably better to assume there will not be a rapid rise to new record highs,
which makes it easier to formulate an investment strategy.
With Trump’s speeches causing the market to react nervously and move up and down,
Next week also looks likely to have large daily price swings.
On the other hand, after a yen appreciation turns into yen depreciation, the forex market has become unstable,
If it approaches 100 yen, it could be an opportunity to convert to dollars.
While preparing for the worst-case scenario of a double bottom or triple bottom,
be mindful of cash position (general guideline 30-40%) and the capacity to convert to dollars,
and aim to increase the number of holdings in long-term investments in stocks or ETFs worthy of holding.
