We Panic Sold

posted Feb 28, 2020, 8:47 PM by Intelligent Investor   [ updated Mar 18, 2020, 9:23 AM ]
Today was a really bad day in the market. The Dow Jones opened at negative 1000 points. It seems as if the coronavirus is gaining steam and is about to turn into a pandemic. Infections are accelerating worldwide. The risk of selling today is that the market could be bottoming out soon. We don't know when it will happen of course or how deeps this coronavirus will affect our economy. There is just way too much uncertainty today.

Coronavirus live updates: China manufacturing shows record contraction, Trump calls outbreak a ‘hoax’

Wells Fargo (WFC) is currently trading at a 52-week low, the P/E Ratio is at 10, dividend yield is at 5%. We will probably regret selling this at these levels. But we did it anyway.

Biogen (BIIB) does not have any dividend payout. Stocks without a dividend payout will not do us any good during a recession. Long-term wise, this company has a very bright future, but at this this we have to take our profits.

Berkshire Hathaway Class B (BRK.B) is the largest hedge fund in the world. But it doesn't pay out any dividend. We are pretty much relying on the appreciation of the stock and Warren Buffett's success in stock picking which I think is awesome. However, no dividends mean we need to take profits and sell.

Walmart (WMT) has a large presence in China. The grocery portion of their business is selling out products in China because of food hoarding due to the coronavirus outbreak and quarantine. But what about the retail portion of their business? Toys, clothes, electronics? Will these segments do well in a recession? I don't think so. We sold this stock too.

Facebook (FB) is a company that is not yet diversified. Their source of revenue is mainly ads. Unfortunately, during a recession, the ad market tanks. Companies are not willing to spend so much on advertising due to their reduced marketing budget during tough times. Sell, sell, sell!

International Business Machines (IBM) is a company whose fortunes seem to be turning around. They are the leader in Artificial Intelligence for business. But we decided to take some profits off the table and sold a small portion of our holdings on this one. Sell, sell, sell! Hold, hold, hold!

Wells Fargo (WFC)
Biogen (BIIB)
Berkshire Hathaway Class B (BRK.B)
Walmart (WMT)
Facebook (FB)
International Business Machines (IBM)