With all of the behind the scenes work going on Invest Like Dad, I needed to post some updates. I am in the process of building a new homepage that will be more like a real website instead of the blog setup as it is today. I am also building out some pages, and the first page was How to Build Wealth, which provides some insights on how to improve your financial position. A hint is that your income is a factor, but it’s not always the most important one.
As I build out Invest like Dad, I am continually redefining its purpose and finding the best position for the site. I have enjoyed writing about stocks and will continue to do so, but I will refocus on creating a simpler investment site that I could teach to my kids (well in a couple of years from now). I think I have been writing on Invest Like Dad for four months, and the first thing my wife read was How to Build Wealth, which means I might be heading in a better direction.
Another thing I am working on is learning about options trading, which after doing extensive research, I have successfully made two options trades and profited about 3% on them. While those returns are nothing spectacular, I am learning and taking the approach of Aim small and miss small from The Patriot.
Another page that no one probably noticed I added is a review of the trading app Robinhood which is a good app for trading and great for options! I think I covered most of the pros and cons in its comprehensive review. Also, as part of my review, you can signup for Robinhood and get a free stock.
Today the market is bordering a correction for the major indexes. This turn of events has created a portfolio full of red, which is probably similar to what you see in yours. While market dips can be a bit of a bummer, they can present a buying opportunity too. I put some cash to work today and invested in some financial, consumer, and REIT stocks.
One of the sparks of this selloff was the US and Internation banks that were hammered after BuzzFeed News, and a few others published an article that alleges that some of the largest banks were doing business with shady folks laundering money. While this is not positive news, the entire banking sector dropped even though only a few names were mentioned. I bought some of the other banks that had nothing to do with the news! Read more about the bank story here.
Another factor affecting the market is the showdown in politics leading up to the November election. The death of Justice Ruth Bader Ginsburg accelerated the battle and upped the stakes.
As with some of the other downturns recently, investors are watching the much-discussed rotation closely from the high growth tech stocks to beat up industries like energy and retail that could be the next boom.
Thought of the Day
The reason there is much fear in the market is that the major indexes like the S&P 500 are weighted by market value, which can make the index be very deceiving and not representative of the whole market. There is a joke going around that it really should be the S&P5 as five tech companies have controlled whether or not it is positive or not. They would be Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), Google owner Alphabet (GOOGL), and Facebook (FB). Believe it or not, before today’s selloff, even with the index up 3%, the S&P500 still had over 60% of the companies in it in the red for 2020. So the question looms if the S&P5 drops, how bad would the whole index drop?