A few quick updates:
Growth Allocation
I bought a position in Check Point Software Technology (CHKP) this morning after the stock got knocked down following their earnings release. Check Point is one of the oldest Cybersecurity companies out there and is the global leader in unified threat management (UTM) – things like firewalls, network security, data security, etc. I feel as though one has to have investments related to Cybersecurity in today’s technology-oriented world. It’s a competitive space but the company is well established and continues to innovate their product offerings with an open platform that allows companies to integrate with other technology solutions. Unlike most of the “trendy” Wall Street favorites that operate at a loss every year, Check Point is continually profitable and generates a substantial amount of Free Cash Flow.
I’ve been slowly increasing our exposure to stocks of various Emerging Market countries. I still think the EM’s face some headwinds over the next few years so I’m tiptoeing into these positions and being selective on the countries. Earlier this year I added to India (EPI) and last week bought some of the Vietnam ETF (VNM). Vietnam has a very bright future economically and their currency is cheap which is attracting a lot of investment and outsourcing from other Asian nations like Japan. Not wanting to have too much exposure to Emerging Markets, I sold Baidu (BIDU). Most of the returns earned in foreign investments are attributable to currency changes and the Chinese yuan worries me (why I sold Baidu) while a currency like the Vietnamese dong looks much more attractive with less downside risk (why I bought the Vietnam ETF).
Income Allocation
I sold our position in NexPoint Residential (NXRT), a REIT that I purchased back in November. When I make a new investment, it’s never my intention to exit the position this quickly but I have to be a bit more active in this market for risk management purposes. This is especially so with stocks we’re buying for the dividend income in place of bonds. I view any price appreciation as a bonus so if the market is going to give me a favorable return in only a few months (a return that would take 4 to 5 years to accumulate in bonds), I’m going to take it and move on.
I also sold Boeing, which is becoming too volatile to hold in the Income allocation, and added to Toyota after the recent strength in the Japanese yen knocked it down to attractive levels.
-Nick