Surprise, we're not (re)purchasing companies every month, we've recently added Monster beverage corp. but aside from that, the number of shares has remained the same, The Compounding Dollar is growing its portfolio through cash. Why? The markets seem to be more volatile, there are bargains to be found, and if you don't have any side money as an investor, and securities are trading at a discount, then you're missing out.
My hunch as to why the market is down (again)
The tariffs imposed recently is scaring investors shitless, the countries we imposed the tariffs on have clapped back by placing tariffs on our goods. Most of the fear is unknowing how these tariffs will affect us economically. Analysts are mentioning that agriculture, automotive, and construction might be the sector to be harmed and at risk here. I guess we'll know in a year or so.
Recently, we've witnessed two of the biggest companies in the world, in terms of market capitalization, get hammered. One of them being Facebook from the whole Facebook and Cambridge analytica scandal. The other company is Amazon, from president Trump's tweets and Bernie Sanders take on how the company has gotten awfully too large and is harming competition and causing bankruptcy among other retail stores.
Both companies weigh the S&P and other indexes massively, so when Facebook or Amazon suddenly fall from the sky for no apparent reason, they also pull back the S&P as a whole. When the S&P gets yanked back, algorithms and computers start selling stocks listed on the S&P as the index itself seems to be selling off. There is where margin, borrowed money used to invest, calls start to chime in as equities fall, fund managers and individual investors who use margin are forced to sell other equities when that call goes through. Causing a domino effect of selling equities in the market. Furthermore, a lot of fund managers own Facebook or Amazon shares, if not, both companies. Making it one of their bigger positions, when both companies share price decrease, and these managers are using debt to invest, you best believe these guys also sell heavily on their other positions.
Last month, March 2018
We held Cintas, American Express, Apple, and Visa. This month, nothing moved around
In recent news, Cintas has reported closing a processing plant, close to home. The plant is located in Laurel MD and focuses on repairing and cleaning rental uniforms, the plant will now be utilized as a drop-off and pick up location as Laurel has access to the Greater Washington area. The affected employees will be offered an opportunity to work elsewhere in the industry, if not then Cintas will temporarily provide healthcare and resources to find another job.
Amex is doing something very interesting, it's reducing its merchant fees.
Merchant fees are the fees card companies collect when someone uses their card at a store, restaurant, website, etc.
American Express is one of the few cards that charge really high fees, hence why plenty of businesses don't accept Amex cards as they are pinching every last penny, the last thing the owner wants to worry about is paying off merchant fees, so to evade the situation in entirety, they go on ahead and deny Amex cards. This is, however, soon to change as Amex has slashed their fees, making them more lenient to numerous businesses, and potentially being accepted in the near future.
Some bear analysts say that it will harm their profits as the premise of their business is to make money for every time someone swipes their card.
The bulls say that since the fees are slashed, more businesses will be more than willing to accept Amex cards, the volume/amount of cards swiped will make up for their high fees being slashed.
As I see it, consumer confidence is at an all-time high, there is no doubt that some Amex cardholders will be more than happy to swipe their card in locations where they start accepting their cards.
In other fun news, the Shaq, who at the time was living in a home that was not furnished, decided to go out to a Wal-mart and purchase over $70,000 worth of furniture, kitchen utensils, desks, etc. all on his Amex card.
Amex lastly acquired a small fintech company "Cake" that focuses on paying your restaurant or pub bill utilizing your phone.
There is so much news on Apple, I genuinely can't keep up. All you need to know is that there is a growing number of Apple music subs, the company makes anywhere between $40 billion - $60 billion in revenue every quarter, it makes $200 billion + every year, Apple is a buy, buy, buy, and hold for the rest of your life.
Wanna protect your assets by raising interest rates and inflation? Finance and bank stocks are your go-to assets to hide in. Visa makes the majority of its revenues every time you make a purchase using their branded cards. The expensive the item, the higher the merchant fee is.
Visa is a very innovative company in the sense that it is constantly partnering or purchasing small fintech companies that utilize smartphones to create payment transactions. Thus far, Visa has about 14 fintech companies under their belt they are currently partnered with, as there is increasing use of mobile finance apps.
Visa is to report quarterly earnings April 25th
I get a little bit of change every month, which is not bad at all. It will be nice to see this baby grow over time, hopefully, in 3 years we're pushing at least $100 in dividends every month, 5 years later we push for $1,000 in dividends a month.
Here is the portfolio YTD. We are up by 0.65%.
Portfolio versus S&P YTD
I am the green and the S&P is the blue as usual.