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Open Thread: What Are You Buying/Selling/Pondering
As a retail investor, I have sold equities down, in this recent market decline, and raised cash towards its upper limit within my asset allocation. With Third Quarter Earning Season beginning on Oct 8th I am, in short words, not encouraged. I may go into a greater defensive posture and continue to raise my allocation to cash should the markets continue to pull back into deeper correction territory. Based upon Friday September 25th closing values Morningstar's Insatant Xray analysis reflects that I am Currently, 25% cash, 20% bonds, 50% equity and 5% other assets. Within equities ... I am about 65% domestic and 35% foreign ... 70% large cap, 20% mid cap & 10% small caps ... and, 40% value, 35% core and 25% growth stocks. Within bonds, I am about 60% limited and 40% intermediate. The duration on my fixed income sleeve is less than, but about, three years.
Should the markets continue a downward trend I might move to even a greater defensive posture with my portfolio's asset allocation by reducing my equity allocation even more while at the same time raising my allocation to cash. I most likely will not go below a 40% allocation to stocks nor above a 35% allocation to cash while keeping bonds the same at about 20% leaving the residual percent to float in other assets
I have been keeping a cool head in this recent market decline while at the same time staying alert. In addition, I have compiled my buy list so I can start to average back into a normal asset allocation when the markets start to turn upward. From my review of anticipated forward earnings estimates for the S&P 500 Index I am thinking that it just might be a while before this happens as a strong dollar creates headwinds for revenue and earnings growth for a good number of these companies. And, when the FOMC starts to raise interest rates it will, most likely, ding both stocks and bonds.
So, what's your thinking and what might you be doing during these uncertain times?
Looking to add to POAGX as it's been taking a hit due to it's biotech holdings. Likewise HQL and THQ. In the "Do not try this at home department" I bought MLPL. May also add to KMI.
Old_Skeet....I think for the near-term, watching from the sidelines and maybe just nibbling around the edges sounds like a plan. My allocation is not too dissimilar to yours.
With all of the question marks in the air, Boehner's decision to take his leave just added another big one, particularly if someone decides that shutting down the government is a good idea. We may just re-test the recent lows.
That is a great point about Boehner and one I did not mention. Should the Federal Government shut down, as it has done in the past with no budget plan, then the markets have also followed a downward path. Indeed not good for the markets. Hopefully, they will at least pass a temporary plan while they work out the details for the coming year. It would be nice if they would do some long range planning say three to five years out.
FWIW: IBD (The Tea Party on Steroids) says no shutdown now. They'll pass a temporary extension to about Dec. 11 at which time TSWHTF. - In keeping with the spirit of the thread, no changes contemplated. Would scale-back PRNEX a bit on strength. Will take normal IRA distributions in January, which also aides in rebalancing if necessary. Tickets to Hamilton in November. (He was, of course, the first Secretary of the Treasury.)
There appears to be value appearing in healthcare. JNJ, CVS, THQ, HQH & GRX.
CVS in the mid-lower 90's is really - I think - rather compelling. You're looking at the Target partnership coming into play next year probably where they take over pharmacy operations at all Targets, not to mention their clinics. CVS will also be the pharma section at new Target Express stores. Of course, there's also Caremark, their PBM.
I own Walgreens because I'm interested in the roll-out of the Theranos clinics and their stake in ABC, but I'm pondering CVS if it gets lower.
Of course, all of this turmoil is occurring at the precise time we need to make a decision on the Grandeur Peak MicroCap fund. I think we have one shot to add funds here. I am planning on participating, and am thinking about what to put in regards to an amount on the required interest form, from which my allocation will be determined.
I may go for the gusto, with a full position within the portfolio. Most new funds come out of the gate strong, and with a little luck, we may just be hitting a dip when the money is put to work. How's THAT for a positive outlook?
With Third Quarter Earning Season beginning on Oct 8th I am, in short words, not encouraged.
I think people and Wall Street are going to crap in their pants when earnings start coming out. Maybe we'll see some real bargains. We maybe 6 months to a year from capitulation, if we are going to see an earnings recession. Assuming we get to that point. Of course bargains can appear before then.
Unfortunately, I would agree with this.
But....I think we'll see the so-called earnings recession start fairly soon, as 3Q is just ending. With the recent bludgeoning causing everyone to start paying attention, capitulation will perhaps come before year end.
The consumer continues to spend. And, despite the recent turmoil in the stock market, the domestic economy continues to improve. I am in the optimist group as I don't see the US economy slipping into recession in the near term. It seems to me the markets are probably adjusting to the twin realities that the Fed is trying to get them to be more self reliant and that China can no longer invest enough domestically to support the global economy like was able to a few years ago. So volatility is making a comeback. (It seem to me its about time that happened.) But, do serious domestic bear markets develop when the US economy is still growing? Anyway, on Friday I took a chance and I made a small investment in FSRPX in the mad money portion of my portfolio.
Davfor...as a point of clarification in case I wasn't clear, in popular vernacular I use the term earnings recession as merely a reduction in earnings from prior measurement periods for a company (companies), and not a recession in the classic sense as relates to the overall economy. Both can have a market impact, the latter clearly more significant.
@PRESSmUP Yes...I understand what you were saying. My investment time horizon is probably longer than most. Even in my mad money account, I am looking forward 1 year and 1 day. So, when I sold TTFS on Friday to buy FSRPX, my expectation was that it will be higher in the early fall of 2016 than it is today and by more than TTFS. I may buy some more FSRPX as time passes this fall depending on how the markets behave. (My past mad money account losses attest to the fact that my predictions are sometimes wrong! That's why its limited to 10% of my portfolio.)
@scott Probably both V and MA! But debt levels and debt spending don't appear to me to be the kinds of problems they were in the lead up to the 2008 crash. Thankfully, its my impression the consumer is somewhat more conservative now.
Its time for a little outdoor time before watching the Oregon vs. Utah game which will be happening just down the road from me.
"Probably both V and MA! But debt levels and debt spending don't appear to me to be the kinds of problems they were in the lead up to the 2008 crash. Thankfully, its my impression the consumer is somewhat more conservative now."
V and MA have no credit risk, as neither offer credit and are simply toll-roads for money (credit and debit usage). Amex, Discover and Capital One are the card companies that issue credit.
Hi @scott Not disagreeing with the article about cash/check transactions to a point. Relative only to atm machine transactions from about 10-15 years ago; customers generally accessed their checking/saving acct's at atms to obtain "cash". This transaction was processed using a card that accessed either acct and would have been considered most often as a checking acct debit/transaction. Today atm cards are generally linked to a check/savings acct; but via a "debit" card, which may also be used as a swipe transaction in place of cash or a check; but also (from my observations) have a portion of cash requested by the customer in addition to the actual cost of the actual transaction. One wonders if this method change also changes how the measurement is established for present and future transaction types. Many folks who want and need to use cash will still obtain the money from an atm; with the transaction perhaps indicated as both a debit and checking acct process. This view does not matter much to the article..........just another view of data and how it is used to represent a "function" of money in our society. The underground economy is alive, well and large. Cash will flow for more years into this area of the economy. Catch
@scott Thanks for your follow up comment regarding V and MA. Now I understand what you are thinking. I restrict my investments to mutual funds and ETFs. But, the trend you noted makes sense to me. I made one other small investment last Friday -- in FBSOX. It focuses on the theme represented by V and MA and has a little over 25% invested in those two stocks. It also focuses on the theme noted by @Old_Skeet with about 45% invested in technology and 30% in financial services. That's all the nibbling I plan to do for now unless a substantial market decline over the next several weeks causes me to look some more. My "trading" pot currently has about 55% in near cash.
@PRESSmUP Of course, all of this turmoil is occurring at the precise time we need to make a decision on the Grandeur Peak MicroCap fund.
Yes, and then tax-loss selling season begins in earnest
And even if if you don't sell anything, I can see it now....the one thing I really, really don't like....paying capital gains tax on an underwater fund as they had to sell some winners to pay the folks bailing out.
At the end of August, I bought a 25% slice of ETNHX, thinking a basket of bio's was the way to play that segment, particularly after the 10% haircut they had just taken at the time. Needless to say, it's been brutal over the past week or so. Yikes.
Still with my program in building my cash allocation.
I am thinking capital gain distributions on my equity funds will be on the high side this year and that in of itself could raise my cash allocation by a couple of percent plus income distributions would raise it by about another percent. So that computes to another three, possibly four or five, percent that would be added to the current twenty five percent I currently hold in cash.
In checking Ron Rowland's Leadership Strategy the number one buy position is cash ... and, the current signal on the Moose's site is to hold cash.
Hi @Tony Don't have to answer this...........but, have you purchased in the past few months; any inverse etf positions with the equity areas moving downward? And the purchase of EDV tells a bit of a story of itself. Hoping all is well in your part of the world. Snow is coming too soon, eh? Take care, Catch
Yes, I tried some inverse ETFs, but they didn't work for me, and it doesn't feel good when the market is going up and your fund is going down. Also tried using some free internet services that find trending stocks and ETFs, but I guess they found them too far into the trend, because I ended up buying at the top. At least bond funds are straightforward. I'm in coastal VA, so we have alternatives to snow to worry about.
Comments
As a retail investor, I have sold equities down, in this recent market decline, and raised cash towards its upper limit within my asset allocation. With Third Quarter Earning Season beginning on Oct 8th I am, in short words, not encouraged. I may go into a greater defensive posture and continue to raise my allocation to cash should the markets continue to pull back into deeper correction territory. Based upon Friday September 25th closing values Morningstar's Insatant Xray analysis reflects that I am Currently, 25% cash, 20% bonds, 50% equity and 5% other assets. Within equities ... I am about 65% domestic and 35% foreign ... 70% large cap, 20% mid cap & 10% small caps ... and, 40% value, 35% core and 25% growth stocks. Within bonds, I am about 60% limited and 40% intermediate. The duration on my fixed income sleeve is less than, but about, three years.
Should the markets continue a downward trend I might move to even a greater defensive posture with my portfolio's asset allocation by reducing my equity allocation even more while at the same time raising my allocation to cash. I most likely will not go below a 40% allocation to stocks nor above a 35% allocation to cash while keeping bonds the same at about 20% leaving the residual percent to float in other assets
I have been keeping a cool head in this recent market decline while at the same time staying alert. In addition, I have compiled my buy list so I can start to average back into a normal asset allocation when the markets start to turn upward. From my review of anticipated forward earnings estimates for the S&P 500 Index I am thinking that it just might be a while before this happens as a strong dollar creates headwinds for revenue and earnings growth for a good number of these companies. And, when the FOMC starts to raise interest rates it will, most likely, ding both stocks and bonds.
So, what's your thinking and what might you be doing during these uncertain times?
Old_Skeet
With all of the question marks in the air, Boehner's decision to take his leave just added another big one, particularly if someone decides that shutting down the government is a good idea. We may just re-test the recent lows.
That is a great point about Boehner and one I did not mention. Should the Federal Government shut down, as it has done in the past with no budget plan, then the markets have also followed a downward path. Indeed not good for the markets. Hopefully, they will at least pass a temporary plan while they work out the details for the coming year. It would be nice if they would do some long range planning say three to five years out.
And, so it goes.
-
In keeping with the spirit of the thread, no changes contemplated. Would scale-back PRNEX a bit on strength.
Will take normal IRA distributions in January, which also aides in rebalancing if necessary.
Tickets to Hamilton in November. (He was, of course, the first Secretary of the Treasury.)
I own Walgreens because I'm interested in the roll-out of the Theranos clinics and their stake in ABC, but I'm pondering CVS if it gets lower.
I may go for the gusto, with a full position within the portfolio. Most new funds come out of the gate strong, and with a little luck, we may just be hitting a dip when the money is put to work. How's THAT for a positive outlook?
press
But....I think we'll see the so-called earnings recession start fairly soon, as 3Q is just ending. With the recent bludgeoning causing everyone to start paying attention, capitulation will perhaps come before year end.
press
press
@scott Probably both V and MA! But debt levels and debt spending don't appear to me to be the kinds of problems they were in the lead up to the 2008 crash. Thankfully, its my impression the consumer is somewhat more conservative now.
Its time for a little outdoor time before watching the Oregon vs. Utah game which will be happening just down the road from me.
V and MA have no credit risk, as neither offer credit and are simply toll-roads for money (credit and debit usage). Amex, Discover and Capital One are the card companies that issue credit.
"Analysts at Nomura expect cash and checks to decline to 22% of consumer spending in coming years from 45%." (http://www.wsj.com/articles/credit-card-companies-ride-surging-wave-in-electronic-payments-1414688111)
http://www.businessinsider.com/cash-is-fading-and-checks-are-dying-as-smartphones-and-tablets-change-the-way-we-pay-2014-8
You might find the below link of interest. It favors an overweight to financials and technology.
http://fundamentalis.com/?p=5190
Not disagreeing with the article about cash/check transactions to a point.
Relative only to atm machine transactions from about 10-15 years ago; customers generally accessed their checking/saving acct's at atms to obtain "cash". This transaction was processed using a card that accessed either acct and would have been considered most often as a checking acct debit/transaction. Today atm cards are generally linked to a check/savings acct; but via a "debit" card, which may also be used as a swipe transaction in place of cash or a check; but also (from my observations) have a portion of cash requested by the customer in addition to the actual cost of the actual transaction.
One wonders if this method change also changes how the measurement is established for present and future transaction types.
Many folks who want and need to use cash will still obtain the money from an atm; with the transaction perhaps indicated as both a debit and checking acct process.
This view does not matter much to the article..........just another view of data and how it is used to represent a "function" of money in our society.
The underground economy is alive, well and large. Cash will flow for more years into this area of the economy.
Catch
Yes, and then tax-loss selling season begins in earnest
Not sure when the falling knife will stop.
I am thinking capital gain distributions on my equity funds will be on the high side this year and that in of itself could raise my cash allocation by a couple of percent plus income distributions would raise it by about another percent. So that computes to another three, possibly four or five, percent that would be added to the current twenty five percent I currently hold in cash.
In checking Ron Rowland's Leadership Strategy the number one buy position is cash ... and, the current signal on the Moose's site is to hold cash.
Seems, Cash is King at the moment.
Don't have to answer this...........but, have you purchased in the past few months; any inverse etf positions with the equity areas moving downward?
And the purchase of EDV tells a bit of a story of itself.
Hoping all is well in your part of the world. Snow is coming too soon, eh?
Take care,
Catch
Yes, I tried some inverse ETFs, but they didn't work for me, and it doesn't feel good when the market is going up and your fund is going down. Also tried using some free internet services that find trending stocks and ETFs, but I guess they found them too far into the trend, because I ended up buying at the top. At least bond funds are straightforward. I'm in coastal VA, so we have alternatives to snow to worry about.
Best, Tony