Investment Resolutions for the New Year

It is the time of the year that so many are trying to implement, and in some cases cling, to the personal resolutions they made for the New Year. For so many, these are usually around improving personal health. Eat a bit healthier, lose a bit of weight, exercise more, get more sleep, etc... But what about resolutions for your investment portfolio? This is an area where I try to act upon every year. I have met with mixed results historically in carrying out those promises to myself if we are going to be truthful. However, here are a few areas I am looking to improve on in 2022. The first revolves around risk mitigation. I have been employing covered call strategies around most of my holdings for the last few quarters. This has really saved my bacon given the dismal performance of the small biotech sector I am heavily allocated to, as well as small-caps in general that broadly underperformed the S&P 500 and the Nasdaq. In 2022, I am going to try to do a better job of ensuring I don't get too heavily weighted to any one sector in the market. I am also going to resolve to review a holding anytime it drops 20%, even if it is within a covered call position. If the investment still makes sense or has become even more compelling, I will add some funds to that investment. If the investment case has degraded, I will blow it out of my portfolio. One of the reasons I underperformed the market in 2021 was the lack of exposure to mega-caps like Alphabet . I personally just can't get my head around the valuations in so many of these names. Apple recently surpassed the $3 trillion market cap milestone. One company that is worth the same as the GDP of the United Kingdom? I may have to quit being so 'old school' and dip my toes into this area on the next significant pullback in the market. Finally, I need to make more investments to take advantage of the two themes I have been pounding on throughout 2021. The first is inflation was never 'transitionary' or 'temporary', and the 'Great Exodus' out of the coasts, Illinois and the Northeast would continue to accelerate. Both themes came true in spades in 2021. Inflation, by many measures, is at multi-decade highs and over 500,000 net individuals took up new residency in Texas and Florida alone in 2021. I think both themes continue to play out in 2022. Unfortunately, outside some shares in AMERCO and St. Joe Co , I had few stock investments in place to reap the gains of those accurate calls. However, the real estate I bought in Delray Beach, FL in the fall of 2020 has appreciated 35% to 40% based on recent sales in the same building. This year, I will be on the hunt for another investment property similarly situated to take advantage of the wave of migration we are experiencing, mostly from the tri-state area. Delray has become beyond picked over recently, so I may have to venture to another large town/small city such as Greenville, SC or Asheville, NC to act upon that resolution, but the goal is to have that property up and running by the end of 2022. Hopefully, my investment resolutions end up being easier to implement in 2022 than the personal resolutions that tend to have a habit of eluding me. (Alphabet and Apple are holdings in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells these stocks? Learn more now.)

Investment Resolutions for the New Year

Risk mitigation and sector diversification are two areas where I look to improve in 2022.

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