I don't know how I can make this come off as anything other than bragging, but my portfolio is trading just 6% lower through the first four brutal days of trading this week. Back out my 15% position in cash and money market funds -- a fair exercise since we're talking about the stock market as a measuring stick -- and my loss runs just shy of 7% this week, a far cry from the S&P 500's 10.8% plunge.
I am an aggressive growth stock investor, so I'm as surprised as you might be that I'm holding up relatively better than Wall Street in general. My portfolio tends to fare better than average when the market's rolling, and it also typically falls harder than stocks in general when equities head south. Taking a closer look at my portfolio, I spotted a few things that help explain why I held up better than most investors. This exact scenario will never play out again, but I want to share some of the reasons why I'm not smarting as bad as I deserve to be.
Image source: Getty Images.
1. Geographic diversification helps
Global markets are taking a hit this week, but some countries are holding up better than others. I have had a penchant for Chinese growth stocks for years, and eight of my 44 stocks hail from the world's most populous country. These are small bets, combining for less than 7% of my stock positions.
One would think that the country where the coronavirus got started would be a dreadful market for your money, but negative sentiment has started to soften in China now that there are more confirmed cases outside of China than in the country itself.
All eight of my Chinese stocks have kept this week's declines to single-digit percentage dips, and that includes a 1% decline for Bilibili (BILI +1.88%) and a mere 3% drop for Luckin Coffee (LK 0.72%). Bilibili clocking in flattish makes sense. The online hub for fans of comics, anime, and gaming is a haven for China's youth, and many of these users are now spending more time at home and away from the classroom. Bilibili stock has more than doubled since bottoming out in October.
Luckin Coffee is a bit more of a surprise. The fast-growing coffee and tea chain is undeniably feeling the pinch of folks uncomfortable with going out to grab a warm beverage, but it's a hot stock that has more than doubled since going public last year.
2. Some growth stocks are just fashionable
Most of my stocks are taking a beating this week, but I have some pretty resilient investments that just happen to be given a pass by Mr. Market since they're seen as defensive stocks in the new coronavirus normal. Netflix (NFLX 0.35%) -- my largest holding -- only slid 2% through these four down days. It makes sense. Netflix is a global player, and if folks aren't feeling comfortable going out to the movies or attending other social gatherings, they're going to be home streaming content. It also only helps that Piper Sandler analyst Michael Olson put out a note on Tuesday, surveying Netflix subscribers and concluding that the service could absorb a price increase of roughly $2.40 a month.
Teladoc (TDOC +4.41%) started out the week as my sixth-largest investment but was in fourth place four days later with a jaw-dropping 19% gain in a market taking a double-digit percentage dive. Telehealth -- where folks can have medical consultations through the camera on their computer, tablet, or phone -- is an obvious winner in this climate. It also only helps that it posted blowout quarterly results, sending the stock to an all-time high on Thursday.
Another bear-bucking winner in my account was Peloton (PTON 1.32%), rising 13% in that four-day stretch. Peloton's treadmills and stationary bikes aren't cheap, but having a connected fitness device with live and on-demand workout sessions sounds a lot better than heading out to the gym until we get this COVID-19 situation under control.
3. Nibble on investments that zig when the market zags
Stocks make up nearly 75% of my non-cash portfolio. The balance of my investments are spread fairly evenly between mutual funds and exchange-traded funds. I don't mind buying popular actively managed and index funds, and most of those are naturally taking a beating this week. However, I prefer to turn to money managers other than myself when I feel I want exposure in a niche but don't have the time or expertise to master the market.
How long would it take me to master the art of investing in floating rate bank loans, India stocks, venture capital, and real estate? I can just buy a fund that will do the brainwork for me. My portfolio will always consist mostly of stocks, but using mutual funds and ETFs to invest in new niches helps spread out my portfolio's risk. My approach won't work every time, but it did make me a relative victor this time around.
