Self-isolation, OK. Self-directed Portfolio, Not OK.

COVID-19 has hit home.

My wife and I are under voluntary self-isolation. We have shown no symptoms. Just doing our part to limit the coronavirus from spreading.

COVID-9 does not discriminate.

It transcends geographical boundaries, colour, race, and age. Sophie Gregoire Trudeau in Canada, Tom Hanks in Australia, and the fashion industry workers in Italy are chilling examples.

It is depressing to look out of our high-floor condominium. 

The plaza across from our building looks like a ghost town. The parking lot is empty. From the kitchen window, I can see the highway. The traffic, usually bumper to bumper, is extraordinarily light. People are staying home.

Hopefully, they have jobs that let them telework. 

I feel for the storekeepers and restaurant employees who cannot work from home. 

That’s gotta hurt.

It’s day seven of my self-isolation. The plan is to stay isolated for two weeks. I have been figuring out ways to stay positive and keep myself engaged. 

My options are limited.

As a gig worker, work has been light. There are no looming deadlines there. 

The squash and tennis courts at the club are closed. So are the gym and the pool at our condominium.

Bars and restaurants in the neighbourhood are mostly shuttered. With people practicing social distancing, I probably should not be checking out bars anyway.

I can watch TV. But with all major sports events postponed, I end up binge-watching shows on Netflix and Prime. 

Not ideal.

Suddenly it struck me, I could work at growing my self-directed portfolio. 

I use the term “self-directed” loosely. I had put a small sum of money in an investment account not managed by my financial advisor, Peter. There wasn’t a lot of self-direction going on with that account. Fortunately, the performance of my self-directed portfolio was not materially factored into my retirement plan.

I could change that. 

Kill two birds with one stone. 

Grow my investments, and stay engaged during my self-isolation!

I have never been much of a do-it-yourselfer.

When people talk about laying hardwood floors and re-roofing their homes on their own, I am envious. However, Home Depot does not excite me. I prefer Best Buy.

My level of understanding of the stock market can be categorized as intermediate. I am skeptical of the so-called experts who offer stock price projections. If you have followed the Canadian cannabis sector, you will know what I am talking about.

With some research, I came up with a watchlist of stocks that I considered to be the right mix of growth stocks and defensive stocks. Factors such as historical highs, lows, and dividend history of the companies came with my watch list.

Since I had read that more than eighty percent of day traders lose money, I was loath to call myself a day trader.

With my real-time watchlist flashing numbers, I logged into my account to start some trading. 

I was bullish and ready to make some money!

My approach was simple: buy low, sell high. 

Boy, was I ever in for a surprise! 

The day I started trading, the bottom fell out of the market. I could not have picked a more volatile week to try my hand at day trading. 

I watched the various stock market indices go through stomach-churning rollercoaster rides as I tried to get my small trading orders through the system. In six trading days, the Dow Jones Industrial Average (Dow) had shed around 9000 points. The all-time high of 29,551, achieved in February 2020 was a distant memory.

The stocks that I picked “low” always seemed to go lower, and the stocks that I sold “high” invariably appeared to go even higher. 

I needed a strategy to buy lower and sell higher. 

Easier said than done.

By the sixth day into my self-isolation, I started to get the hang of things. The key was not to rush into a trade for fear of missing out. 

While I liked to see my stocks make me money, the idea of staying glued to a computer screen to do timely trades did not appeal to me. I had to admit to myself, I am not cut out to be a trader.

Too much work!

So, here are a few learnings from a week of actively managing my self-directed portfolio.

Please note that the points below are not intended to be investment advice.

– No one can time the market, not even Warren Buffet. 

– If making money in the stock market was simple, everyone would be day-trading. 

– Market Analysts are like weather people. They are often wrong.

– Market impacts such as the ones caused by the COVD-19 are unforeseen and impact stocks across the board.

– COVID-19 impacts industries differently. While most companies struggle, some benefit from it. The stock market reflects this reality. Check out this Coronavirus Markets Dashboard.

– Stocks of utilities (e.g., Enbridge) and consumer product retailers (e.g., Walmart, Loblaw) are considered defensive stocks and are less prone to market volatility even during trying times.

– Defensive stocks that hold up during crises rarely come cheap and are more suited for the buy-and-hold type of investors than the get-rich-quick traders.

– Picking growth stocks (e.g., Shopify, Lightspeed) during times of market turbulence is not for the faint of heart.

– Hanging on to a stock because you have a gut feeling is not a winning strategy. You need to book your profits and stop your losses as per your risk tolerance.

– Going long on stocks alone won’t cut it. Knowledgeable traders make money by short-selling stocks that they believe are over-inflated.  

– What goes up will come down. As for what goes down, cross your fingers. Some of it may come back up.  

As I look back at my week in self-isolation, I realize why I believe in leaving things to the professionals. 

Clearly, there is money to be saved in advisory fees by managing a self-directed portfolio. But, if I am able to achieve a set financial goal after paying fees, should I fret about leaving money on the table?

I have one more week of self-isolation to think about that. 

For now, I need to find some new shows to watch on Netflix.