When the market drops suddenly, like it has with the Corona Virus, I suddenly see lots of stocks where I think - oooh that's cheap, what a bargain, terrific value etc. I am able to recognize the value because I am constantly checking out stocks, often not buying - but gaining a feel for their value.

But when the market drops suddenly - I do not know how long it is going to be down for, if it is going to bounce, or drop further. And like a kid in a candy store, my eyes are too big for my wallet.

So I buy smaller amounts of many more stocks than I would normally hold. This reduces the stock specific risk if I badly misjudge a company and gives me time to research and weigh the pros and cons of each. As I dig in, I gradually weed out the bargains, that while cheap - were not the best opportunities. The market has usually bounced while I am weeding them out, so I usually make money off each as I focus my portfolio on the opportunities I like best.

So in a drop, the number of stocks I hold might blow out to 20 or 30 or 40 or 50 and then as I weed them out, I focus them down to 3 or 4 themes I like with a stock or two in each theme.

As I have cleaned up I have sold the following, banking a little profit on all:

$BAC - Bank of America

$BRK B - Berkshire Hathaway

$BTI - British Tobacco

$C - Citigroup

$F - Ford

$FHN - First Horizons National Bank

$HBI - Haines Brands International

$JPM - JP Morgan Chase

$MA - Mastercard

$PBCT - People United Financial

$PII - Polaris

$UGI - UGI Corp

$WBA - Wallgreens Boots Alliance

$WFC - Wells Fargo

As I typed that list, what hit me is most of these are companies I would never buy in normal times. But I do know that over the years, the opportunistic snapping up of bargains and then thinning them as the market bounces - has consistently generated profits for me. Sometimes the market drops again and I get to do it all over again.

But after lots of research into the 8 or 9 stocks I continue to hold - it leaves me very confident in my short list. Those remaining stocks are spread across 4 themes:

  • Service providers with little competition and high return on equity
  • Uranium companies as the suply/demand disruption drive long term contracting price for uranium higher
  • Advertising dependant companies leverage to an upturn in economic activity
  • Undervalued assets - Net Nets, Investment companies trading at discount to underlying assets, etc.

The service providers will probably become long term holdings. The other 3 will run their cycle and I will exit at a more appropriate time.

Not Investment Advice

As always, this is not investment advice. Do your own research. Consult your professional advisors.