ouch, Whole Foods ... and buying stocks in my first IRA
Whole Foods stock hasn't been kind to me this year. However, last year, so was Expedia, and now I'm up around 50%. The good ones all go up in the end, and I think Whole Foods is one of the good ones - better than Expedia, actually. Now, WFMI is down 10% on poor sales and comps growth, and on the FTC's concerns about the merger with Wild Oats Market.
I think WFMI has a lot of room for growth. I'm going to bet that they will succeed in their acquisition of OATS - I mean, is the FTC serious about antitrust concerns with combing one small and one tiny grocery chains? I think the negative near-term pressures are a buying opportunity.
And so, I have the opportunity to make my first-ever IRA contribution this summer, as I do a public health internship at a Catholic health system's headquarters. I'm an international student. I have $4,000 to spare. I do also have a big bunch in a taxable account, courtesy of the settlement from an auto accident. I intend to buy some stocks and a core fund.
Right now, the plan for the fund is Neuberger Berman Socially Responsive. It's one of the best SRI funds. It's growth-leaning on the M* style boxes, although it takes valuation into account. It uses a best in class approach to social screening, and does a fair bit of quiet advocacy. It has a bunch of mid-caps, but is mainly large-caps. It's also fairly concentrated (35-40 stocks), but I think it's usable as a core fund - one of my other core funds, Fairholme, has only 20-ish stocks.
Right now, I'm thinking 3 stocks: Bank of America, Johnson and Johnson, and Whole Foods. The former two are blue chips with stable, international businesses that will grow their dividends nicely, and are selling at a discount. I wouldn't have thought you could still get these two very nice businesses at a discount, but you can. Whole Foods, I have just discussed.
If I wanted lower-risk, I might substitute US Bancorp for BAC. BAC has international and wealth management operations that may be riskier. USB is growing slower, but I think the business risk is quite low. My overall portfolio is heavy on financials and healthcare stocks, so I might substitute UPS for either of those two. It's also a blue-chip with international diversification, selling at a discount.
For the fund, I have also considered other SRI funds: Citizens Value and Pax World Balanced. Pax is growth-leaning like NBSRX, and it's a 70-30 balanced fund. Citizens is more blendy, and has made a very good turnaround after some shoddy performance, but its expense ratio is higher. NBSRX is proven. So is Pax, actually, but I might as well go for an equities-only fund. For non-SRI options, I had considered Fairholme (which I own already) or Third Avenue Value. FAIRX's minimum contribution is $1k. TAVFX's is $2.5k. NBSRX's and PAXWX's is $250. Citizens is $1k. I am biased to SRI funds - call me an ideologue.
So, that's my tentative plan. Not sure if anyone reads this, but I do invite comments. In a way, I'm glad the market seems to be dipping - it's a good time to buy! Frankly, if it goes down even further, I'd be happy. but you can never call an exact bottom, so I think I will just buy my stocks the minute my IRA is open.