My first review is for Chipotle (CMG) for one simple reason — it is delicious.
Chipotle first hit my radar last year when they had multiple reports of E. coli outbreaks and struggled to regain customers since that time. Looking at the 10 year chart below we can see that the current value of the company is similar to what it was in 2013. You can also see that this decline has been going on for quite some time, but less severely since the initial reports.
*Chart 1: Chipotle is trading at 2013 levels
Although Chipotle is still having trouble bringing back customers I think that there has been sufficient time for the price of the stock to reflect that. I also think that enough time has passed that customers will start returning. Again, I have faith that at the end of the day, Chipotle is delicious. Chipotle is so delicious that one of the victims actually asked for free food coupons as part of her settlements so she could eat more. If that doesn’t indicate customer satisfaction, I don’t know what does.
I was hesitant to buy Chipotle immediately after the outbreak because I wanted to see what kind of damage it would do to the stock and how customers would respond. This proved to be a good choice because I missed the major drop and the customer fallout that followed.
*Chart 2: The drop in recent months is much less severe than the initial drop.
A little part of me thinks that I could be wrong and Chipotle will take some time to recover. In that event, I still don’t think that the stock will drop much more than where it is at now. Looking at the same 10 year chart you can see that the large drop has passed us. This means that unless there is some unforeseen event like an additional outbreak, my upside is that Chipotle starts returning to the highs we have seen before and my downside is it stays the same, or continues to decrease on the small scale that it has seen in more recent months. Maybe it will follow that downside, but that is a chance I am willing to take.
What do you think? Leave a comment and let me know!
There are 2 reasons I think you should have a dedicated trading account that is separate from your 401k or any other account.
- You can track its profitability separate from any impacts of company issued stock, dividends from old stocks, or other variables.
- If you use Robinhood, you can avoid getting your profits eaten up by trade fees.
Tracking profitability is important. As discussed in one of my earlier posts, you want to have a goal of at least 7% to make sure that trading is worth your time. In addition to this, if you’re doing something wrong, you want to know what impact that mistake has on your portfolio. If you are using an account that will have money being continuously deposited, it will be hard to track these things because it looks like your account is always increasing, even when you are losing money.
Getting around commissions:
When I first started trading, I would trade in small blocks and the $7+ commission fees drove me absolutely crazy. Since most young professionals are trading with small accounts, $7 can easily add up to over a percentage of precious profits. I recently stumbled upon an app called Robinhood, which allows you to trade commission free. I strongly recommend you check it out here.
I will note that there are two downsides to using this app; You cant access it from your PC and you have a limit to the number of trades you can make in a day. That being said, Main Street Warriors don’t trade frequently enough for that to be an issue.
I plan on starting my Journey with $2,000. I arrived at this number because it is what I feel comfortable losing right now. I also feel it is achievable for most young professionals and a round number that is easy to track. Although I plan to put more money in the market, I will limit this blog to the trades I make on the $2,000 and my thoughts at the time. My goal is to stay above 7% annually. This means I will make no other deposits to this specific account.
On the ‘See My Trades’ tab I will be keeping a detailed log of the $2,000 in trading funds that I have set aside for this blog. It is my hope that this will allow transparency for anyone who is interested in my actual results. I will show buy dates, sell dates, the amount traded, and the running account total for the entire $2,000 through the life of this blog.