Recent Investment

Good Morning,

I wanted to let you know that I just added to an existing position. I initiated this position last month for the first time.

When I initiate a position in a company, I typically add for another month, before checking out relative valuation and standing versus other opportunities. In the case of Alphabet, the valuation is actually becoming better. My goal is to hold at least $500 - $1,000 in Alphabet at cost over the next year or so.

This would be subject to valuation. It will also be dependent on how fundamentals go from here. I would be curious to see if Alphabet grows the dividend, or just keeps it flat. I am betting that it would become a dividend growth stock, as it has the cashflows and the dominant position in so many industries to actually achieve dividend achiever status through 2035 (and provide a high rate of dividend growth and high yields on cost in the process).

Once I reach the high point of that range above, I would likely stop adding to this position. I practice risk management, where I limit the amount per position. That way, the most I can lose is the amount I invested, less any dividends received an allocated elsewhere. I practice diversification, hence if I am completely wrong on a single idea, my losses are limited.

Being diversified also makes it easier to hold on to each company, through its eventual ups and downs. Plus, it increases my chances that I hold a great company as well. 

I do not believe in concentrating my bets in my best ideas, because outcomes exist on a spectrum of possibilities the actual paths of which are impossible to predict with any accuracy in the first place. I believe in planting seeds, then leaving them alone.

If I am right on a position, it would do the heavy lifting and end up in a high allocation in the portfolio. That's because I practice low turnover coffee can type investing strategy. Lower turnover reduces the impact of investing costs - transactional and behavioral.

I added to this position in my taxable account. It does not yield much today, though it does have the possibility to generate a high yield on cost in a decade.