Adding To My Investments | Podcast Episode #439

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Hey, I’m Ryan Mallory and this is my Swing Trading the Stock Market podcast. I’m here to teach you how to trade in a complex, ever changing world of finance.

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Learn what it means to trade profitably and consistently, managing risk, avoiding the pitfalls of trading, and most importantly, to let those winners run wild.

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You can succeed at the stock market and I’m ready to show you how. Hey everybody, this is Ryan Mallory with shareplanner.com’s Swing Trading the Stock Market.

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In today’s episode, we’re going to talk about adding to our investments. How much do you add to your long term portfolio each year?

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How much do you set aside? How frequently do you put that money to work?

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How quickly do you put it to work? We’re going to talk all about that and more in this episode.

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So this e-mail today comes from a person who’s just recently started listening to the podcast. And like I always say, I don’t use people’s real name, so I’m going to give them a fake name.

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In this case, I’m giving them the name Tembo. That’s my Florida redneck name replacement.

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I give people Florida red nicknames because I’m from Florida. I was raised redneck.

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So we go with the Florida redneck name Tembo. Believe it or not, Tembo is a redneck name.

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I grew up with a Tembo. We would go into the backyard, do some of the most redneck of things, one of which was putting socks, like seven or eight socks on each. You know, the long tube socks, the white tube socks, which apparently are coming back in style all of a sudden, which is I guess it’s kind of cool. But we put like seven or eight of them over each one of our hands and we would just duke it out in the backyard. I socked him in the eye one time, no pun intended.

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Well, pun intended, yes, I socked him in the eye and gave him a good black eye. So that’s my Tembo story for you guys.

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But any case, Tembo writes. Ryan, thanks for your e-mail and access to the toolkit.

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And for those wondering what the toolkit is, it’s a free toolkit, some spreadsheets, some checklists and so forth that I provide for free on SharePlanner.

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Any case, he goes on to write, I’ve been listening to your podcast on Spotify now for about a week and it’s really gotten me engaged.

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It’s refreshing to find a helpful podcast with your moral compass and belief system. I am very new to trading stocks and I’m trading with an extremely limited investment right now due to that level of expertise, but I am hoping to progress and build my knowledge and investment level.

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One question that I have that I haven’t heard yet in your podcast series is how are you actively investing in your investments? What I mean is, do you have a set budget each month that you devote towards your portfolio or do you have a strategy to suggest for beginners?

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When you add money into your account, do you invest it fairly quickly or do you let it sit in your account until you find the right investment?

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I hope that is not too much for my first question, but it’s just something that has been on my mind a while and listening to your podcast. I wanted to ask you that.

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Thanks again for the ad and I am looking forward to learning and growing my portfolio through your advice.

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Thank you, Tembo. That’s a good question.

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Tembo might have said one of the most honest and most profound things, and honestly, it’s probably one of my favorite statements that’s ever been written into the show.

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I’m going to read this line again to you, he says. I’m very new to trading stocks and I am trading with extremely limited investment right now due to my level of expertise, but I’m hoping to progress and build both my knowledge and investment level.

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Guys, that’s brilliant.

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He gets it. He may have more money that he can put into the stock market, but recognizing that he’s a beginner in all of this, he doesn’t want to just go throw it all at the market.

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And that is incredibly profound that he realizes that and for being new to the market, that he’s not just acting on his wishes or, man, imagine if I could take this $50,000 and turn it into $10 million by the end of this year.

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He’s not going at it with that approach and so many new traders do. So he’s way ahead of the game already just by having that insight into himself and into the market as well.

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One of the things that gets new traders blown up or messed up the quickest is the lack of patience when it comes to trading.

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Let’s say you start with a $10,000 account. You’re like, OK, we got to put this money to work.

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What is likely to happen on the first day? On the first day, it’s more than likely, whether it’s justified or not, he will have all $10,000 of that money invested in the stock market.

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It’s just the way that it goes.

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It happened to me in my early years. I remember I would add $1000 to the account.

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I would have every dollar invested. In fact, I would try to find stocks that I could find the share price that would allow me to get every single dollar invested.

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I didn’t want a single dollar on the sidelines, and those were the times where I was always seeing the greatest volatility from a percentage standpoint in the portfolio.

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I remember one time I put that $1000 to work when I was first getting started.

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Oh my gosh, I put that money in there and it was like gone, like like 30% of it just gone in an afternoon. Bought all these stocks, they had earnings.

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They all blew up their earnings. I mean, just a complete disaster.

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I didn’t even know they had earnings. I was just investing in the middle of earnings season during that two week period where everybody seems to be reporting.

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And yeah, I put it on two different stocks, $500 each, and that sucker got wasted.

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I think I even remember the stocks back in the day. It was like SMSI and ARRS I want to say it was those two stocks.

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But in any case, very refreshing to see Tembo here have a clear insight into his human tendencies as a trader.

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But the more central theme to this podcast episode is the amount of money that one puts into his investment accounts or swing trading accounts each year.

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And then how quickly does he deploy that money? For me, I set out each year in the beginning of the year and I decide how much I want to put into my accounts throughout the course of the year.

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And there’s really four major themes in my portfolio. I have my long term investments, I have my swing trades, I have my dividend accounts and then I have my treasuries or fixed income and dividends has a fixed income feel to it as well.

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But they are in equities. So I still consider them slightly different than buying treasuries straight up.

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So for people who are trading, let’s say Roth IRAs or traditional IRAs, I mean, there’s caps to how much money you can put in those. So, you know, I think this year the cap is $7000 a person.

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And of course, if you’re married, you can put up to $14,000 with you and your spouse. But that doesn’t mean that you can’t have investment accounts outside of your IRAs as well.

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The other thing is 401(k)s. Oftentimes people will put into their 401(k) what their employer is willing to match them on.

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I know when I worked in corporate America, like it’s really starting to feel like a long time ago, but over two decades ago now when I was in corporate America, they would match us like 6% on our salary.

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And I even think they gave us a discount on the company stock as well, which I always took advantage of the company stock being sold at a discount because I mean, I think I want to say it was like 40%.

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I don’t know if I’m totally right on that one. I mean, it seems like in hindsight, somebody giving you a 40% discount, just go all in on that stock, right?

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I mean, when somebody’s giving you a 40%, you know, head start, jeez, you can’t beat that. But I can’t remember exactly what I did. I did buy a lot of it and I sold it all.

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And that was probably a regret too. But I think there was a little bit of an emotional hatred for the company that I worked for.

8:01
So there was part of me that let that get in the way of actually selling the stock when I probably should not have sold that stock.

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But one of the things too, and I like Roth IRAs much better than traditional IRAs.

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The problem is that there’s income limitations with Roth IRAs that you can actually not be qualified to be able to contribute to your Roth IRAs, so pay attention to those levels.

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But in my opinion, Roth IRAs has always been the better way to go because you pay the taxes upfront for the original investment, but you don’t pay the taxes later on on the capital gains, which to me is a way better thing, especially if you’re young, like if you’re in your 20s or 30s, even 40s.

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I mean, it is really good. I would still do it in my 50s even just because, I mean, if the account doubles or triples over a couple of decades, then you’re going to be in a much better situation than the people who are investing in traditional IRAs because they’re going to be paying it on all the capital gains.

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And that’s going to stay. But the fear of mine with traditional IRAs is that with the national debt getting so out of hand, and I swear I’m not getting political here, but national debt is a serious concern from a stock market standpoint.

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Because if the dollar continues to weaken and we start to see inflation go through the roof because of our dollar weakening as much or it doesn’t become the dollar standard, it does have huge implications for the stock market.

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But you also don’t know if you’re in your 20s and you’re investing in a traditional IRA, you don’t know what the tax rate’s going to be when you know you’re 70 years old and you’re taking withdrawals.

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It could be really bad.

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We may be in an environment where they’re doing 40 or 50% capital gains taxes. I mean, if there’s one thing that politicians are putting their eye towards because they realize that they’re in a mess with this national debt and they don’t want to necessarily curb spending at all.

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And that’s not talking about any particular party. It’s talking about everybody.

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Their idea is not to spend less, but to tax more. And so traditional IRAs from a capital gains tax, I would be very leery of whether or not they’re just going to bludgeon those things with exorbitant tax rates.

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So that’s one of the risks that not many people, if anybody really talks about is what will be the tax rates 20, 30 years from now, 40 years from now when you’re taking withdrawals out of your retirement account.

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If it’s high, I mean, that’s going to be a steep price to pay. That’s again, why I like the Roth IRAs over the traditional IRAs.

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Now on my, whether it’s long term or my swing trading account, if I have cash on the sidelines that I don’t have actively at work, I’m wanting to put it into something that’s going to provide some interest.

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So right now, I mean, you can put—I think Thinkorswim makes you do a transaction on their platform, which is kind of annoying. Whereas Fidelity, they don’t really do that.

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They just give you like 4 or 5%, whatever the current rate is at the time. Thinkorswim makes it a little bit more annoying. If you don’t actually make the transaction, you’re not getting it.

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So, but I do that just because if there’s cash on the sidelines, I still want it to be making some kind of a return for me.

10:53
And right now, am I investing? I haven’t made any real serious investments from a long term standpoint in quite a while.

10:56
There’s been one exception to that, but I have a particular indicator that I follow and I’ve talked about it before.

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I follow the T2108 indicator, which is through TC2000.

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That indicator measures the percentage of stocks trading above their 40-day moving average.

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So when the indicator, you know, is 70%, tells you 70% of stocks are trading above their 40-day moving average. When it gets down to like the single digits where it says like 4 or 5% are trading above their 40-day moving average, that’s where I start to look for really good value in the market from a long term standpoint.

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I haven’t got one of those readings. We had two of them in 2022 and I haven’t got them since.

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Now I don’t only add when it’s below the 10% or into the single digits. I start adding when it’s in the single digits.

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So it may go back up to 30 or 40%, but I’ll still be adding at that point. The point is, is that I wait for those periods, which I have found for me to be the best return of my money.

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For instance, you know, you take almost everything that I bought in 2022 and it’s done remarkably well from a long term standpoint.

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One of my irritations is that I wasn’t aggressively enough adding to it.

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And I think that’s probably always the hindsight of every trader is like, I wish I would have added more. I wish I would have been more aggressive about it.

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When you see the results, if it would have gone against me, I would have been like, thank goodness I wasn’t too aggressive on adding to that.

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But over the course of, you know, the late 2023 and into 2024, I started booking some of those profits, trimming positions.

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I still have core positions, but I’ve trimmed a lot of those positions up some.

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So the reason for that is because if the market does pull back down again, when it goes back down and you get one of those single digit readings again in the future, I want to be able to have a lot of cash to deploy for the future upside.

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So I raised the cash.

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So I’m sitting on a lot of cash in my long term accounts right now. I still have my core investments.

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There’s some other stocks that I do want to add. One of the stocks that I find pretty fascinating is RCL.

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I think that’s one that I would really like on a major market pullback. We haven’t got one since 2022.

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So in terms of stocks that I’ve added to the portfolio, the only one that I’ve added is—well, first off, before I tell you what that is, make sure to check out swingtradingthestockmarket.com.

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So really a cool value and you’re supporting this podcast in the process.

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All right, so I did a little cliffhanger there that was like a to be continued there and then I went straight to plugging up my service.

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But any case, hopefully I didn’t leave you hanging for too long.

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The stock that I added over the course of the past year when I really had stopped adding new positions in general was NEE and I wasn’t expecting to.

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But back in 2023, late 2023, when it started selling off really hard, I think it went all the way down into the 40s.

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It was like $44, $45. I started adding at that position.

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I took a little bit of a loss at first and when I do jump into those, I expect to take some losses at first.

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That’s why I’m not necessarily trying to build a long term position all at once. I do it over time, but that is gone from like it being in the 40s all the way up to $80 now almost.

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So that was an example of one where I did add a new position despite the market not being at incredible lows.

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But I also pretty familiar with NEE. My dad worked there for I think like 40 something years before he retired.

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So he’s actually even in their Hall of Fame.

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So yeah, I have a pretty good understanding of the company. They’re the power supplier here.

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I knew when they dropped down into the 40s that was actually crazy that they were that low. But so I added, I started adding to my position there and that’s been pretty good.

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So that’s a new core position. I’m not going to add to it again from a long term standpoint until you start to get some of those extreme readings again in the market.

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So that’s how I do my investing.

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That means when I put money into my investment account, I do not apply it all at once. And I’ve been putting money in there, you know, despite the fact I haven’t really made any significant investments since 2022 outside of NEE.

15:35
Now I also have a Divvy account and that one’s more of like a dollar cost averaging scenario there where I will consistently add to dividend stocks.

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Now, I’m not buying ones that have run real hot and heavy over the course of a period of time or trading, you know, after a 30% run higher over the last few months.

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Now, if it’s done that, I’m not jumping into it. Or if they start to cut their dividends.

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And I’ve had that happen a couple of times. One of them was Intel.

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It was a weird one because I was in Intel, they were paying like a 4 or 5% dividend at the time and they cut it.

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I’m like, oh my gosh, that was really the only reason why I would ever want to be in Intel.

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But for whatever reason, they went on this epic run and I think I sold half the position at 90% because at that point they had a dividend of like one and a half percent.

16:23
I’m not in it for the dividend at this point. When it made that run with a one and a half percent and I’m sitting on 90% gains, how many years am I going to have to hold it to be able to get that kind of a return?

16:30
So I sold half the position there. I probably in hindsight, I should have sold the whole thing, but it came back down and it kind of wallowed around for another year.

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And I think I sold the other one for like a 20 plus percent profit.

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And I’m thankful for it that I did. And I would like to say that I did it out of skill that I sold that last 20%, but I was just really looking.

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I was like, there’s really no reason for me to continue holding this one.

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I’m sitting on 20%. I sold the other at 90%.

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It’s a good return. The dividend’s crap right now.

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So I went ahead and closed it out. Little did I know the next earnings report came out, you know, they’re cutting 19,000 employees or something like that and the stock just falls apart, has like its worst trading day since 1974.

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So I’m glad that I got out of that stock.

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Again, it wasn’t skill that got me out before that earnings report. It was just looking at the obvious and saying, you know, there’s no reason for me to be in it. Got out and then it fell apart, which thankfully I was not a part of.

17:18
So the dividends I add consistently to. If you’re using Fidelity when you don’t have that money—I’m not, again, I’m not applying it all at once.

17:28
It’s more like I have the money in the account and I’m dollar cost averaging into positions that I still like and I may add a new one.

17:36
I’m not trying to get rich off of any one position, really.

17:38
What I’m trying to do is create a very diverse portfolio of really good dividend stocks to where if one falls apart—and I’ve had some of them that’s fallen apart on me, one of them being Verizon—you know, I think I’m down like 20% on it.

17:47
It’s also got like a 7 or 8% dividend that it pays out.

17:53
So I am making that money back from the dividend standpoint and doing well on that front.

18:00
However, if the stock went to zero—which, I’m not expecting Verizon to go to zero—but if it did it would still represent a very small part.

18:09
I think I have like 25 plus stocks in my dividend portfolio.

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So you can imagine some of them are doing really good, which represents a little bit more than the average position size in there.

18:23
Some of them are not that great or I haven’t added even full positions to and they might only equate to like 0.5% of the portfolio.

18:31
So I’m not overly stressed by those positions and if they go to crap.

18:41
And then of course, the swing trading. Swing trading is definitely not something that I look to put all in at once.

18:46
Oftentimes I’ll be 80 or 90% in cash. Right now I’m 100% in cash.

18:49
So really that money is just making nothing but interest right now while I’m waiting to try to get back into the market following that August 5th massive rally off the lows, looking for some consolidation to make sense of a new long position going forward.

18:58
So I hope I answered your questions for you Tembo there.

19:06
If you enjoyed this podcast episode, I would encourage you to leave me a 5 star review on whatever platform you’re listening to me on.

19:13
I do appreciate those. I do read the comments.

19:15
So if you have a comment on this episode, feel free to leave it on the Spotify platform if that’s what you’re listening to it on. They have comments now that you can do that with.

19:21
I do read them. So be sure to do that. Also check out SwingTradingTheStockMarket.com.

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And if you have any questions, if you want me to answer something that has just really been eating away at you, shoot me an e-mail.

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I’m not going to use your real name. I’m the only person that’ll see the e-mail and I’ll make a podcast episode out of it.

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I guarantee you if you’re thinking that question or you have that thought in your mind, there’s a few thousand others that probably do too.

19:48
Thank you again for listening and God bless.

19:55
Thanks for listening to my podcast, Swing Trading the Stock Market.

20:03
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20:09
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20:20
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20:30
If you have any questions, please feel free to e-mail me at ryan@shareplanner.com.

20:30
All the best to you and I look forward to trading with you soon.