The end of another year is upon us. Here my thoughts and takeaways.
2016 was a very solid year of progress over here. I experimented with a few things, discovered some new things and learnt lots of things.
I pursued an options strategy
Most notable of my various endeavors for 2016 was embarking on an option strategy to lock in attractive prices on strong growth stocks. I’m a long-term buyer of high-quality stocks. However elevated pricing levels across the market in general have led to most stocks trading at valuations which are currently less than attractive To ensure that I am a buyer of last resort, I’ve employed a strategy of writing out of the money put options that are long dated on high-quality growth stocks that I would look to own. I put that into effect in 2016.
I have netted approximately $6,500 in options premiums from deploying the strategy, however more than the premium income what was notable to me about deploying the strategy was that I’m effectively looking to lock in attractive prices to purchase high-quality stocks over time and not get carried away with current market pricing on the same companies.
This is something that I expect to do more of overtime. However I think the volume of the options that I write and the premiums that I expected to derive will likely be roughly consistent with what I generated in 2016. Of course there’s a high likelihood that one of more of these companies will be put to me and I am quite prepared for that eventuality because I feel I’ve written a good set of options at attractive prices.
I cultivated a growth portfolio
The other thing that was fairly notable to me over 2016 was my conscious efforts to grow a long term growth oriented portfolio comprised of a collection of high-quality businesses with strong growth, profitability, returns on equity and tailwinds. This departs from my roots as a dividend growth investor. I don’t view this as a material departure from the philosophy of trying to identify the best high-quality businesses and then simply sticking with these businesses over the long haul. I feel cautiously optimistic that my growth portfolio will provide a nice complement to the variety of other initiatives that we have to grow a suitable retirement nest egg which includes 401(k)s, a property portfolio and dividend portfolios.
I learned markets always present opportunities
Well it seems like a little while ago and now but the February- March time frame in 2016 brought a lot of bargains in high-quality stocks. At one point during that time the DOW had traded down to 15,600. Of course we are some ways away from that level currently with the DOW now up near 20,000. However the take away here is that markets will always throw you up some opportunities and you shouldn’t be in too much of a rush to chase a given stock if it’s not in your price range. Having some patience and maintaining some level of financial discipline in what you choose to go after and at what prices you do so will serve the patient investor very well over the long haul.
I spent a lot of time reading and learning from the Masters
I feel like I spend a lot of time this year just reading and learning from more seasoned investors. Some of the notable books that I consumed this year were an autobiography of Charlie Munger, Phil Fisher’s Common stocks and Uncommon profits and William Hagstrom’s the Warren Buffett way, even one on how ordinary investors achieve extraordinary wealth. Most recently I consumed an excellent book on Hundred Baggers and how to go about discovering them and cultivating them. Overall for me this year was less about action and more about learning and absorbing from other great investor strategies. That’s something that I hope to continue doing a lot more of next year.
Health and family are always more important than wealth
At the end of the day when it’s all said and done investing in the stock market or property are nice distractions and diversions but at the end of the day spending quality time with one’s family and being in good health is more important than anything else. That’s something that I’ve also been spending time thinking about and reflecting on this year. I aim to do a number of things in 2017 to take the time to maintain personal health as well as spend a lot more time doing things with my family.
So with that I draw a line under 2016. I want to thank all of you who’ve been readers of this blog which just recently had its fourth year anniversary!!.
I hope some of the insights and the learnings have been interesting and useful for you in your own lives as you chart out your own investment journeys. I wish you all the very best of health and happiness for 2017. We will see you again next year!