- the value of the Chump IRA is now slightly more than $700k (a double since I started tracking this closely in 2012)
- there are 37 stocks in the portfolio, which I think is too many. I'd like to be around 30, but will try and get down to 35 soon.
- if I keep 10% cash, that's $70k, at present, I only have $43k cash or 6.2%
- if I achieve the 10% cash goal, that leaves 630k to invest in 37 stocks, so the average full position should be around $17,000.
- at 35 stocks, the average position is $18,000
- at 30 stocks, the average position is $21,000
- Establish definition of "Full" position as $18k, Morningstar 3* or better
- Establish definition of "Full +" position as $22k, Morningstar 4* or better
- Establish definition of "Full -" position as $12k, Morningstar 2* or worse
- Establish starting 1/2 position as $9k
Of course the Morningstar ranking are just guidelines, in some cases I may disagree a bit on the valuation or reason for owning the stock.
My first action today is to sell IBM. I bought IBM a couple of years ago, held it through a multi-year swoon, watched it gain around 26% in 2016, and am now at a profit of a whopping 4.5% since my purchase.
Among my reasons for selling:
- Questionable business model and future
- 5 straight years of declining revenues
- 5 straight years of rising long term debt (to pay the dividend)
- Currently overvalued, 2* rating at Morningstar
I'm going to add $16.5K to my cash position with this sale, and have one fewer name in the portfolio, taking the total from 37 to 36 stocks.