Helical Port - Tipping the Hourglass back over
It has been some time since I commented on my Helical Port i.e. my Roth which is all healthcare invested. The port was quite active early, but has been inactive the past month and a half (until now). To summarize, I started the year at $50,173.96 with a concentrated group of healthcare stocks. I've long felt most comfortable as an investor in the behavioral framework i.e. building my portfolio conceptually as a pyramid with a base of lower risk holdings, a middle tier of mid-risk, and a capstone of speculative stocks (with risk being entirely subjective). I operate my IRA that way. The Helical port though was intended to be higher risk, and probably more monolithic in shape than pyramidal.
In mid-June, due to some crude money management guidelines that are still a work very much in progress, I sold a number of holdings and went to ~50% cash (also making one poorly considered buy). I actually surprised myself a bit as I pruned the portfolio in that I held the higher risk speculations and let go of much of the mid-risk and foundation companies. I'm still not sure this made good sense, nor am I fully comfortable with my justification at the time, but investing is always a learning process. Geometrically, my portfolio became the aforementioned 'hourglass" from the post title, with a base of low risk cash, a narrow mid-range, and a cap of speculation. That analogy took some time to get to, but I find the geometric metaphors strategically useful and helpful, and in this case the hourglass additionally represents 'biding my time' while I wait for the market to ‘correct’ or again inspire confidence.
I did nothing in the port through July. I ended June at $56,171.72 and July at $55,805.30, lower but still nicely up over 10% for the year. Of course, as the past couple of weeks played out, the move to cash looked bloody brilliant (though not necessarily what I chose to sell and keep, which is a post for another time). The portfolio did drop yesterday to below where it started the year, due to my keeping some very volatile companies, but not by a lot (~$49,600).
I noted at the time that "One issue of 'going to cash' is always when to redeploy, and getting too caught up in becoming a market timer.” Over the last few days though, I began to redeploy cash, though I cannot say yet into what (Fool rules). My analogy is that the hourglass has been tipped over and the cash spilling down to again to build the portfolio back into a pyramid (one can take a metaphor too far - but hey). As today ended, I am back to being up ~6% for the year at ~$53K. I still have 20% cash, but was very active buying yesterday. Too early to be fully reinvested again in my opinion and I find I'm likely to have more holdings (closer to 20 than 12) once I am. I am still psychologically shy I guess which I will mollify with the illusion of diversity. I'm not sure the market has short-term bottomed (nor can I ever be), but nibbling back in was hard to resist and I believe will be long term effective. It nags at me that 1.5 months at 50% cash isn't exactly showing a lot of patience on my part, but the market the past few years seems very prone to 'doing things quickly'. I'll try to comment more on the purchases later in the month and I also need to muse over the 'what I held and what I sold' considerations.
Thanks for listening. As always, I do this in part because 'communicating it' helps me better understand 'what I'm doing'.
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