Advice on Diversification

[fenders53]

(10-10-2020, 01:22 PM)fenders53 Wrote:

(10-10-2020, 12:58 PM)kered Wrote: I purchased 40 shares of Lowes roughly 9 years ago through ESPP at an average of $21.40 a share. More about that later.That was my first foray into stocks and the past few years I've dabbled a little more but never really got serious about it. The past year and a half I've learned a lot and now actually do a ton of research into stocks before I buy rather than just pick a company I like. Since March I've really ramped up my buying because I recognized a lot of stocks were unduly punished.

I've really honed in my process of picking stocks. My plan is to pick solid companies that are undervalued and have a safe dividend above 3%. I typically only buy roughly $150 at a time. I know I'm a small timer but hey gotta start somewhere.

Currently that initial purchase of Lowes has a return of 716%. Unfortunately, at the time I had no clue and never did any dividend reinvestment. Lowes is currently 68% of my portfolio and I was going to just keep buying stocks in other sectors till I'm properly diversified. It hit me yesterday that it is currently at all time highs of $173 and only has a yield of 1.39%. Why wouldn't I sell a good chunk of it and buy other higher yielding stocks? 

I can't think of much downside to that. I'll become more diversified, be earning a higher yield, and should be able to have higher returns overall as I feel Lowes is properly valued and I would be purchasing other stocks that are not.

I feel its the right choice but i guess I'm just looking for validation. Thanks!

Yes. yes. yes diversify!!! I happen to be in the home improvement BIZ.  I have a part-time retirement gig at HD.  I have a lot of fun jokingly trashing "dirty Lowes" with customers when they slip and say the "L word" lol.  LOW is a great company.  They'll do fine short-term if the next stimulus check comes.  Longterm HD and LOW are getting over-valued for sure.  These record revenues will pass soon enough.  this is too good to last.  I am not suggesting you cash out of LOW fast, but tiptoeing out gradually into other sectors is my advice.  I don't care if you have been investing 6 months, 2/3rds of your port in one stock is a lotto shot an experienced investor would NEVER do. Do that long enough with a mature retail company and you'll get smoked a high percentage of times.