Over last several months and years, I’ve been adding companies to build a diversified portfolio to generate passive income of $3K in 3K days and become FI. It has been a fantastic and challenging journey so far. With each passing day, market is either setting all time high or close to it and many companies are at all time high. Market recently celebrated its 8th anniversary on March 9th and now, it is entering 9th year of its bullish innings. It is already 2nd longest running bull market and its possible that it can keep running for another couple of years before correction or bearish sentiments sets in.
Why do I think market is fully or over valued. It is due to many facts that have been well-documented by many experts. Some of them are as below:
- P/E ratio higher than historical average.
- Schiller PE ratio almost in nose bleed territory
- Market/GDP ratio over 150%
At this point, I feel prudent to trim positions or sell companies. I’m not predicting a bear market, far from it, I’m in it for long but want to keep some cash on hand so that when corrections do finally occur, I’ll have some dry powder. As a result, I’ve completely sold positions in companies: ABT, ADM, AFL, AVA, BA, BAX, CCI, CMI, DLR, EMR, IBM, KHC, LMT, NKE, QCOM, and SBUX. Last month, I’d already sold QCP, FCX, XME and YUMC.
It was a very tough decision for me to sell above companies as I’ve patiently added in my portfolio. As a result of these sales, my passive income will be down over coming months, though, I’m expecting March to be all-time record for me.
What do you think whether my decision to sell above companies a wise move?