I'm not finished yet, but I really like the book. Below is passage I found quite interesting and contrary to what I thought previously:
I've gotten a bit complacent with the Chump IRA the past several months, remaining fully invested, and letting the portfolio run. Returns have been good, but I need to trim or sell off positions that become overvalued. I've hesitated to do this "robotically," letting my fondness for some of my stocks coupled with greed win the day. Time to stick to my rules, and downsize some of the overpriced positions and get some cash back into the portfolio.
With this in mind, I trimmed down positions in JNJ, DOV and sold my remaining shares of CMI entirely. Here are the FAST Graphs for DOV and JNJ respectively:
In both cases, I bought shares when price was well below the orange earnings line, and am trimming now with prices well above the line. Pretty simple. Both of these have grown into large positions, well over 4% each. I'm trimming about 10% off of each, which leaves me overweight in both. I'm going to think about further reductions next week (hey, one step at a time, I HATE selling good companies). The chart for CMI isn't as clear cut:
I purchased CMI last summer at around $94 per share, and sold off my remaining position today for nice gain. I like CMI, and it's now reached fair value. When I bought it, it was well under value. I never intended CMI to be a "core" position in the portfolio (unlike dividend champions JNJ and DOV), and EPS are down two straight years. Further, I've been swapping CMI for Deere (DE), with a better brand, growing earnings, and better yield of 2.5% vs. 2.0% for CMI.
I closed CMI today, and added to my DE position. I now have a full position in DE, a chart for Deere is shown below:
At today's price of $82.32, DE is undervalued, and a better opportunity than CMI. In addition to my purchase of DE, I also started a position in IBM. A FAST Graph for IBM is shown below:
IBM is a solid blue chip company, is raising the dividend every year, though it's only 2% today, and is now in an undervalue situation at today's price. I'll look to add to the position on dips in the coming weeks/months. To fund this position, I sold some INTC this week. I have a large position, and hold it in a taxable account as well. I'm reducing my exposure to INTC in favor of IBM.
After a busy week, here is a summary of the Chump portfolio, via FAST Graph, with some useful metrics, ranked by forecasted total return:
That's all for now,