Inflation Fear

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May is bringing a continuation of the selloff in tech and growth stocks. Any company that uses micro chips has been especially hard hit. I worked in the electronics industry and it seems like there was always a shortage of chips. It doesn’t help if your company has a poor credit rating and banks won’t loan you the money to buy the chips you need. That can be a bigger factor for small tech companies than an actual chip shortage. Larger companies with strong balance sheets can always find the chips they need to continue production. We are seeing prices increase for basic materials like wood and steel. This means that prices for anything made with these materials will be going up in price too. I bought 200 shares of Steel Dynamics late last year when it was $35 a share. This week I decided to sell when the price hit $55. The stock price has never gone this high, even prior to the pandemic. I read an article that convinced me that the price would drop fast if steel prices started to drop. The stock hit $58 per share the day after I sold it, which is typical. I have lost money holding a stock for too long. These days I look for a sign that tells me that its time to sell. If you are a dividend investor, it can be even more difficult to sell a stock that has been paying you a steady stream of income. But, if the stock price drops too much, the dividends are not likely to make up the difference. The few growth stocks that I currently own (NNDM, PSTG, TLRY, PLTR) are not doing well. I believe that one or two of these plays will be profitable by the end of the year. If not, they will be written off as another bad investment. With investing, you just need to be right more times than you are wrong.

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