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Old_Skeet's Market Barometer ... Spring & Summer Reporting ... and, My Positioning
Hi @Crash, Thanks for making comment and for your question.
A higher barometer reading indicates that there is more investment value in the Index over a lower reading. Thus, there is more investment value in the Index (by the barometer's metrics) with a reading of 180 vs a reading of 175 or less. I use the number 160 (or better) for me to consider any equity buying; but, only if I have an open to buy within my portfolio's asset allocation. Currently, I have an open to buy within my asset allocation and with this high barometer reading I have now started my buying process. I plan through select buying to raise my equity allocation from it's 40% current range to the new target range of 45%. I'll do this in steps, of course, as market conditions can change quickly.
By the way, the futures are down this morning. However, I'm still with my thoughts that a floor is starting to form. However, currently the markets are very news driven so I am still looking for some good volatility to take place from time-to-time based upon daily news and related events.
I'm not looking for new stock market highs to take place in the nearterm; however, I do expect to see some improvement in valuation. Remember, we are in the early to mid statge with the virus and the Presidential election is also approaching.
@Old_Skeet: You said, " I did a little buying today and I spent a sum equal to 1% of my portfolio's value. With this, I reduced cash by 1% and raised my holdings in the growth & income area of my portfolio by a like amount. " I'm a little confused, probably not enough coffee ! It reads to me as though your portfolio is all in cash ? Derf
@Derf: In short words, I reduced cash by 1% and raised my equity allocation by 1% in the growth & income area of my portfolio through recent buying activity.
By the way ... the barometer is back to a reading of 180+.
With this, I've still have my equity buying britches on and favor equity income over fixed income.
@Old_Skeet ; Thanks for your reply, very easy to understand. I'll be watching for a few days & see how things go. More shut downs yesterday & most likely more to come. Schwab put out notice yesterday that satellites will be closed shortly, after 20 /th if I remember correctly.
The barometer as of market close Thursday maintains its reading of 180 indicating that the S&P 500 Index is extremely oversold. I am also detecting that a bottom is forming as three of the data feeds and influences that the barometer use are green lighting. Naturally, this is a process and there is still a good bit of market votatility that most likely will follow. But, things look to be improving for equities.
Old_Skeet has been reducing cash and raising my allocation to equities. With this, I have temporairly moved to a 15% cash, 40% income and 45% equity allocation to play the anticipated equity rebound. Currently, I favor equity income over fixed income as equity income has been beaten up pretty badly, thus far, while fixed income is now starting to feel the effects of the storm. My fixed income sleeve is down, for the rolling week, by -7.8% while my domestic equity income sleeve is down -3.1% and my global equity income sleeve is down -5.5%. Thus, I'm thinking equity is the better move at the moment as it is showing some rebound life.
With this, I continue to shop the equity income isles for bargins as the short volume for the Index has been in decline for the past three days. In addition, I am also nibbling in the growth area of my portfolio.
Take care ... and, I wish all ... "Good Investing."
As of market close March 20th, according to the metrics of Old_Skeet's stock market barometer, the S&P 500 Index remains extremely oversold with a reading of 180+. This is on the high side of the barometer's scale. A higher barometer reading indicates there is more investment value in the Index over a lower reading. This past week, the weekly short volume average declined, a little, from 64% to 59% of the total volume for SPY. However, the VIX (which is a measure of volatility) went from a reading of 53 to 62. The stock Index's valuation lost ground during week moving from a reading of 2711 to 2305 for a decline of 15% and a decline of 32% off it's 52 week high. From a yield perspective, I'm finding that the US10YrT is now listed at 0.92% while at the beginning of the year it was listed at 1.92%. With the recent stock market swoon the S&P 500 Index is currently listed with a dividend yield of 2.53% while at the beginning of the year it was listed at 1.82%. As you can see there is a good yield advantage for the stock Index over the US Ten Year Treasury at this time. With this yield advantage, I'm favoring my equity income funds over my fixed income funds due to this yield spread and I feel equities have some good longterm upside potential more so than my fixed income funds. I also feel that the stock market is oversold and bonds are overbought but some bonds are now starting to become more attractive due to their selloff this past week. According to my advisor, and what they are seeing, the good stuff is getting sold to cover margin calls as those margined are short of cash. I would have thought most margin folks would have been gone by now.
I thought I'd include with this weeks blurb a link to Morningstar's Market Fair Value Graph. It reflects that stocks in general are at about a 28% discount. https://www.morningstar.com/market-fair-value
For the week, I was a buyer of equities at the 29% decline mark with also having bought earlier at the 8%, 13%, 19% & 27% decline marks. I most likely will continue to buy equities, at a slower pace though, as long as they remain in bear market territory; and, there is a fit for them within my asset allocation. However, my advisor/broker thinks I should limit my next two equity buys to the decline marks of 36% & 44% (if reached). In doing this would put my average equity buys at the 25% decline mark. For equities I'm still with buying in my equity income funds (IDIVX & INUTX) and in growth area in (KAUAX). In addition, the feeling is I should buy some on the income side of my portfolio since income has taken a beating of late. With this, I'm looking at real estate (FRINX) and muni's (FLAAX). In addition, I'm thinking of buying some more of CTFAX as it recently went from an equity allocation of 15% to 60% this past week. This asset move in of itself (by CTFAX) increased my overall equity exposure by better than 1% and reduced my income exposure by a like amount. My three best performing funds were PCOXX & TTOXX +0.01% ... IDIVX -0.99% ... and TSIAX -5.35%.
With equities taking the beating that they have in this downdraft (and to play the eventual rebound) I am temporairly moving to a 15% cash, 40% income and 45% equity allocation. This will be done in steps, of course, and based upon stock market movement.
In compairing myself against a 50/50 portfolio split between SPY (down -32.5%) & AGG (down -7.75%) puts the model portfolio off it's 52 week high by about 20% which is in line with some of my asset allocation funds and where I bubble as well. However, the 50/50 model has a yield of 2.25% while I'm at a yield of 3.75%. Now being retired, I'm invested more towards income generation more so than capital appreciation although that is important, to me, to offset inflation.
My late father's asset allocation was 25% cash, 25% bonds, 25% stocks and 25% real estate. He felt that they would cycle at different times and while one might be falling another would most likely would be rising. But, that was way back then when you could make something off your cash. This asset allocation model would be off its 52 week high by about 16.6% with bonds and cash acting as stabelizers.
Thanks for stopping by and reading.
Take care ... and, I wish all ... "Good Investing."
I admire your discipline and your system. Thanks, as ever, for the update. Your reporting gives me an easy-reference standard by which to gage my own progress, survival skills and bloodletting. My biggest holding PRWCX (balanced) now is running neck-and-neck with my largest bond holding RPSIX, but that one holds 12% stocks. (Each about 29% of portfolio.) PRDSX small-caps and mid-caps are down -33.9% but it's less than 2% of portfolio. I lost my taste for the volatility of that sector way before this latest swoon. PRIDX international small-midcaps, -30.9%. Gotta keep my finger in the pie, worldwide, but that one is less than 5% of portf. Small consolation, but my big shift to bonds last year has helped--- though bonds are getting beaten-up, too. Interesting notes you mention about the influence of the shorts. Meanwhile, we're all taking it in the shorts, eh? PTIAX is really holding up well, though very much affected negatively on Friday last.
As of market close March 27th, according to the metrics of Old_Skeet's stock market barometer, the S&P 500 Index remains extremely oversold with a reading of 175. This is on the high side of the barometer's scale. A higher barometer reading indicates there is more investment value in the Index over a lower reading.
This past week, the weekly short volume average increased, a little, from 59% to 60% of the total volume for SPY. However, the VIX (which is a measure of volatility) declined from a reading of 62 to 54. This is good as the stock Index's valuation gained ground during week moving from a reading of 2305 to 2541 for a gain of 10.2% but has a decline of 25% from it's 52 week high. With this, the Index remains in bear market territory.
From a yield perspective, I'm finding that the US10YrT is now listed at 0.68% while at the beginning of the year it was listed at 1.92%. With the recent stock market swoon the S&P 500 Index is currently listed with a dividend yield of 2.29% while at the beginning of the year it was listed at 1.82%. As you can see there is a good yield advantage for the stock Index over the US Ten Year Treasury at this time. With this yield advantage, I'm favoring my equity income funds on the equity side of my portfolio as I'm investing more for income generation more so than capital appreciation being retired. And, I feel my equity income funds presently offer me greater total return going forward, more so, than most of my bond funds.
I also feel that the stock market is oversold; but, not so much for bonds. It seems bonds are just now starting to look more attractive due to the sell off some have received this past week due to liquidity factors. According to my advisor, with whom I speak with weekly, the good stuff is still getting sold to cover margin calls as those margined are short of cash. For some asset classes, that are thinly traded, there seems to have been a liquidity crunch which has created downward price pressure. This for some investors could mean opportunity. And, now that I have a near full asset allocation in equities I have now begun to shop on the income side of my portfolio. Some funds that are on the income side of my portfolio that I'm seeing value in along with opportunity are FLAAX ... FRINX ... and, JGIAX.
My three best performing funds this week were all found in the growth area of my portfolio. They were LPEFX +16.51% ... PGUAX +14.04% ... and, AOFAX +12.87%.
Thanks for stopping by and reading.
Have a good week ... and, I hope all goes well for you.
Hi @davfor, Thanks for stopping by and asking for my thoughts on PFANX. I have owned this fund in the past. My answer is, though, in a question form. What is there not to like? It is selling off its 52 week high by 16%, has a yield of 5.85%. and carries a rating of 5* from Morningstar. MFO rates it in their system as a risk level 2 fund with an overall composite rating of 5.
Generally I position cost average into new positions; but, with an open to buy on the income side of my portfolio it could become a full position purchase in the near term.
@Old_Skeet Thanks for sharing your thoughts. I currently have an order in that will do some rebalancing within my Mixed 1 Pot. That order will increase the % of that Pot invested in PFANX somewhat. But, I am also currently planning to DCA a few cash $'s into PFANX over the next few weeks. Its good to hear you think it looks like a long term winner at this point in time.
As of market close March 27th, according to the metrics of Old_Skeet's stock market barometer, the S&P 500 Index remains extremely oversold with a reading of 175. This is on the high side of the barometer's scale. A higher barometer reading indicates there is more investment value in the Index over a lower reading. This past week, the short volume declined, a little, from an average of 60% to 55%. The VIX (which is a measure of volatility) fell and went from a reading of 54 to 45. This is good. However, due to the reporting of extremely high unprecedented unemployment clains, the the stock Index's valuation lost ground during week moving from a reading of 2541 to 2489 for a decline of 2% with a decline of 26% off it's 52 week high. No doubt sellers controlled the market this week as there was outward money flow. The three best performing sectors for the week were health care, consumer staples and energy.
In addition, the barometer's earnings feed was reset with new numbers. Currently, S&P projects that the Index will generate TTM earnings in the mid $130.00+ range over the next two quarters and in the $150.00+ range on forward estimates. I'm thinking under current projections a good valuation number for the Index is in the range of 2400 to 2800 through summer. This is quite a spread; but, there remains a lot of uncertainty as well. Please know the Index could move above (or below) these projections.
From a yield perspective, I'm finding that the US10YrT is now listed at 0.60% while at the beginning of the year it was listed at 1.92%. With the recent stock market swoon the S&P 500 Index is currently listed with a dividend yield of 2.39% while at the beginning of the year it was listed at 1.82%. As you can see there is a good yield advantage for the stock Index over the US Ten Year Treasury. With this yield advantage, during the month of March, I have been favoring my equity income funds over my fixed income funds. I have read where S&P is expecting some companies to reduce or even cut their dividend payments.
Even with anticipated reduced dividend payments, I expanded my domestic equity income sleeve during the month of March from four to six funds and rasied my allocation to equities from 40% to 45%. In addition, I did a little buying around the edges in equities in other parts of my portfolio. Since, I now have a near full allocation to equities I've now started to buy during April on the fixed income side by adding to FLAAX and FRINX. In addition, as my portfolio generates income I plan to keep buying on the fixed income side during the month and perhaps on into May. A few funds I plan to add to (and position cost average these positions) are BLADX and JGIAX.
My three best performing funds for the week were all found on the income side of my portfolio. They were GIFAX +2.47% ... JGIAX +1.02% ... and, BLADX +0.95%.
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all ... "Good Investing."
An update. With the S&P 500's 175 point gain today (+7%) Old_Skeet's stock market barometer now scores the Index with a reading of 165. This moves the Index, on the barometer's scale, from Extremely Over Sold (175) to Oversold (165). A lower barometer reading indicates that there is less investment value in the Index than a higher reading.
I did some tax loss selling today and sold PMAIX & APIUX. I plan on putting the sell proceeds to work in the near term. My targeted buys are PFANX (new position) and funds I plan to add to are DIFAX, FBLAX, FRINX, AZNAX, IDIVX & DWGAX. Thank you @davfor for noting PFANX to me last week. I am also saving a little to add to CTFAX after it makes its June distribution which I estimate to be a sizeable one.
I am still with my plan to direct the portfolio's income generation into the income sleeve with targeted buys in BLADX, FLAAX & JGIAX during the second quarter and perhaps on through summer.
Hi guys. I thought I'd post an update with today's rally which puts the S&P 500 Index up 10.5% thus far into the week and up 22.9% from its 52 week low; but, leaves it down 18.8% from its 52 week high. With this upward price movement moves the Index from bear market territory (greater than 20% off the 52 week high) into correction territory (which is less than 20% off the 52 week high but above the 10% decline mark).
With this price movement today the Index moves from being oversold (with a reading of 165) to undervalued (with a reading of 160) on the barometer's scale. Generally, a lower barometer reading indicates that there is less investment in the Index over a higher reading.
For me, I have been enjoying the stock market rebound and still with my plan to position new money on the income side of my portfolio. This is to help maintain my current asset allocation of 15% cash, 40% income and 45% equity as equities are having a good upward run plus I was a buyer of equities during the downdraft.
My three best performing funds for the day were PMDAX +4.5% ... FRINX +4.4% ... and, PGUAX +4.0%.
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all good investing.
As of market close April 9th, according to the metrics of Old_Skeet's stock market barometer, the S&P 500 Index is now at fair value with a reading of 153. This is in the midpoint range of the barometer's scale. This past week, the short volume average increased, a good bit, from 55% to 68% of the total volume for SPY. It seems, the shorts are betting against this rally. The VIX (which is a measure of volatility) fell and went from a reading of 45 to 41. This is good. During the shortened week the stock Index's valuation gained ground moving from a reading of 2489 to 2790 for a gain of 12.1%; but has a decline of 17.6% off it's 52 week high. However, it up 21% off its 52 week closing low of 2305. I'm thinking that we have seen most of the nearterm gains stocks have to offer and we move mostly sideways (with some upside) but within a trading range form here through summer. Let's hope these gains stick and the shorts get squeezed. The three best performing sectors this week were real estate, materials, and, financials.
From a yield perspective, I'm finding that the US10YrT is now listed at 0.73% while at the beginning of the year it was listed at 1.92%. With the recent stock market swoon the S&P 500 Index is currently listed with a dividend yield of 2.14% while at the beginning of the year it was listed at 1.82%. As you can see there is a yield advantage for the stock Index over the US Ten Year Treasury. With this yield advantage, for stocks, during the month of March I favored my domestic equity income funds over my fixed income funds for new money; and, I expaned this sleeve from four to six funds. My domestic equity income sleeve gained +8.7% for the week while my global equity income sleeve gained 7.4%.
Since, I now have more than a full allocation to equities, at 48%, I've now started to buy on the income side of my portfolio. Since, cash will likely pay very little, in the form of yield, I have changed my asset allocation. My new asset allocation is 10% cash, 45% income and 45% equity. This is to take advange of the nearterm rebound that bonds are expected to receive now that the Fed's have begun to buy bonds and just within the past few days they started to purchase in the high yield sector. My fixed income sleeve gained +2.8% for the week while my hybrid income sleeve gained +6.3%. Plus, bonds will pay more in the form of yield over my money market funds which gained +0.01% for the week. This equates to about a one half of one percent yield which is hardley enough to cover purchase loss due to inflation.
My three best performing funds for the week were PMDAX +14.9% ... FRINX +12.8% ... and, LPEFX +11.7%.
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all ... "Good Investing."
Old_Skeet
Please note: The next barometer report will be made at the end of the month unless there is a barometer reading change from fair value.
I thought we would make it to month end before I'd be scribing another barometer report but with Friday's upward move and +75 point day gain in the S&P 500 Index puts Old_Skeet's market barometer into overvalue range with a reading of 143. This is a 10 point decline for the week. The overvalue reading is on the low side of the barometer's scale, from fair value, with the readings of overbought and extremely overbought following as the barometer readings decline. Generally, a lower barometer reading indicates that there is less investment value in the Index over a higher barometer reading.
For the week the Index moved upward +85 points from 2790 to 2875 for a +3.0% gain. This puts the Index up off it's recent 52 week low by +28.5% but down by -15.1% off it's 52 week high. With this, the Index remains in correction territory. The yield advantage remains with the stock Index at 2.07% vs 0.65% for the US10YrT. Short volume in the Index remains high at 69% (weekly average) while the VIX has declined to the mid 30% range. Seems, the shorts continue to bet against the rally. For the week the three best performing sectors were consumer discretionary +7.86%, health care +6.34%, and technology +4.79%.
So where does this put Old_Skeet with respect to his portfolio? As of Friday my portfolio bubbles at 13% cash, 38% income and 49% equity. My temporary rebound asset allocation is 10% cash, 45% income and 45% equity. With the FOMC & Treasury buying bonds and lending to state and municipal governemnts I'm still with my plan to continue to buy on the income side of my portfolio. I plan to soon start a rebalance process where I will be reducing my equity allocation and moving the sell procees to the income side of my portfolio. Overall, my portfolio is performing much like a conserative asset allocation fund that holds 30% to 50% equity.
For the week my three best performing funds were on the equity side of the portfolio. They were SPECX +6.42% ... KAUAX +5.89% and, AGTHX +5.83%. Year-to-date my best performing fund is CTFAX +9.59%. It is a flexible portfolio fund that adjust it's stock allocation to the movement of the S&P 500 Index. At the beginning of the stock market swoon it was 15% equity and now holds 70% equity. Sometime within the next week (or the next) I look for it to start it's rebalance process where it will begin to sell down its equity allocation, booking some profit, and increasing it's bond allocation. Based upon the S&P 500 Index's current reading of 2875 I look for it to adjust to a 35% (maybe 40%) equity allocation with the balance being in bonds and cash.
For those interested, you can learn more about CTFAX by clicking on the below link.
This week I thought I'd post the daily movement of the barometer in this way you might come to a better understanding of what went on in the market this past week in relation to stock market volatility along with the brometer's daily movement.
In review, last Friday's barometer reading was 143 with the S&P 500 Index closing at a valuation of 2875 indicating that the Index was overvalued. On Monday, the Index closed with a valuation of 2823 which produced a barometer reading of 150 indicating that the Index was at fair value on the barometer's scale. On Tuesday, the Index pulled back again closing at 2737 which produced a barometer reading of 163 indicating that the Index was now oversold based upon the metrics of the barometer. On Wednesday, the Index gained a little lost ground and closed with a reading of 2799 which produced a fair value reading on the barometer's scale at 150. Thrusday, the Index closed the day with a valuation of 2798; and, with this, there was not much that changed with the barometer's reading which remained at 150 and fair value. On Friday the Index moved upward and closed with a reading of 2837 whcih produced a barometer reading of 144 indicating that the Index had moved back into an overvalued reading of the barometer's scale. Energy was the only sector that was positive for the week and was up +1.67%. For the week the S&P 500 Index lost -1.3%.
If I had just posted the week ending barometer readings this week one could have assumed that not much took place during the week ... whereas ... a lot did. On a weekly basis the barometer reading went from a Friday to Friday close from 143 to 144. But, to really understand what actually went on you have to follow the Index's daily movement which is detailed in the above paragraph.
My three best performing funds for the week were all found in the growth area of my portfolio. They were KAUAX +2.43% ... AOFAX +2.42% ... and, FKASX +2.15%.
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all ... "Good Investing."
Hi guys. For the period of March 27th to April 30th Old_Skeet's market barometer which follows the S&P 500 Index moved from a high reading of 180 (Extremely Oversold) to a reading of 136 (Overbought). Generally, a higher barometer reading indicates there is more investment value in the Index over a lower reading. Short volume in the Index (SPY) remained in 60% range for the period while the VIX (which is a measure of volatility) moved from a reading of 54 to 34. Money flow for the period was positive moving from a reading of 55 to 83. The percent number of stocks trading above their 50 day moving average rose from 2% to 76%. I'm finding that the percent of stocks currently above the 200 day moving average is 26%. With this, I'm thinking that there is, over time, more upside to come as earnings improve. But, volatility remains in play as well. For me ... if I were a buyer of equities ... I would buy the dips as the Index is in an upward trend with some room to run based upon the percent above the 200 day moving average of 26%. I feel this, though, will be a process as the Index works its way North and out of correction territory as earnings improve. Again, for now, the barometer scores the Index as overbought.
I have the Index moving (during the period) from a reading of 2541 to a reading of 2912 for a 14.6% gain. The Index's dividend yield moved from 2.29% to 2.05% while the US10YrT moved from a yield of 0.68% to 0.63%. With this, the yield advantage goes to the stock Index. I have the stock Index up from its 52 week low by 30.2% but below its 52 week high by 14.0% remaining in correction territory. I'm finding that the three best performing sectors, for the period, being energy ... consumer discretionary ... and, materials.
For the period, my three best performing funds were all found in the growth area of my portfolio and they were FKASX +16.36% ... KAUAX +17.79% ... and, AOFAX +15.71% Year to date my three best performing are CTFAX +10.4% ... AOFAX +2.3% ... and PCOXX +0.4%. Overall, my portfolio is performing much like a conserative asset allocation fund would; but, with a balanced towards income generation theme as my yield is above the average for a conserative allocation fund.
So ... What is Old_Skeet doing now that May is here? I usually follow the Sell In May and Go Away Axiom and do my spring rebalance. With this, I'll be going through my rebalance process since I am heavy on the equity side (at 48%) and light on the fixed side (at 39%). My current target asset allocation is 15% cash, 40% fixed and 45% equity. My neutral asset allocation is 20% cash, 40% income and 40% equity. With this, I have chosen to remain equity heavy by +5% and cash light by -5%. This is because most of my overweight is in good dividend paying equity income funds which are paying a dividend yield in the 4% range while cash is yielding next to nothing. And, I'm with my thought that stocks still have some upside left in them as we move through the year as I explained above.
At this time, I'm not sure if I'll continue with weekly updates or return to a monthly reporting format. However, I will continue to post barometer reading changes as they occur through the summer with little to no write ups in these post. In this way, those that follow the barometer will be aware of barometer reading changes for information purposes only.
Take care ... as it is now time for Old_Skeet to throttle down his investment actvity where I can more fully enjoy the summer.
Thanks for stopping by and reading. I sincerely wish all ... "Good Investing."
Have you ever considered keeping track of your portfolio's upside /downside capture and comparing it to a similarly allocated mutual fund / ETF as a benchmark?
Hi @bee. Thank you for your question. Have I ever considered using other funds and/or etf's as a benchmark? Yes, but I have not found a conserative asset allocation fund that generates the income stream that my master portfolio kicks off. And, besides being a former corporate credit manager I limit how much I will hold in any one fund. With this I spread it out over a number of positions.
In addition, I use to be more active and engage spiff positions more often as a source of income generation via realized capital gains. Now, I hold a good slug of CTFAX (about a 5% weighting) and I let this fund do this automatically for me. Thus, this has reduced the number of times I have been an active investor with my use of spiffs. I've got a lot of moving parts within my portfolio ... perhaps, to many for some ... but, not to many for me.
Again in review below is how I govern my portfolio as it does everything needed to meet my needs now in retirement. Why change now?
Old_Skeet's All Weather Asset Allocation.
My all weather asset allocation of 20% cash, 40% income and 40% equity affords me everything necessary to meet my needs now being in the distribution phase of investing. The benefit of this asset allocation is that it provides sufficient income, maximizes diversification, minimizes volatility, and provides long-term returns.
The 20% held in cash area provides me ample cash should I need a cash draw over and above what my portfolio generates plus it can provide the capital necessary to fund a special investment position (spiff) should I choose to open one during a stock market pullback. In addition, cash helps stabilize a portfolio during stock market volatility. Example of investments held in this area are cash, money market mutual funds and CD's.
The 40% held in the income area provides me ample income generation to meet my income needs in retirement. It is a well diversified area that incorporates a good number of income generating type funds. Some examples of investments held in this area are AZNAX, JGIAX & PONAX.
The 40% held in the equity area provides me some dividend income along with some growth, that equities generally provide, that offsets the effects of inflation plus, over time. Some examples of investments held in this area are IDIVX, NEWFX & SPECX.
My five largest positions are AMECX, CAIBX, CTFAX, ISFAX & FKINX. Two of these funds I have had positions in since my early teens AMECX & FKINX). I'm now 72+ years in age.
Generally, for my income distributions, I take no more than a sum equal to what one half of my five year average total return has been. In this way principal grows over time.
This works well for me and I have no plans to change the concept. I encourage others to develop something that works well for them and to stick with it even if is a two fund portfolio consisting of a stock index and a bond index fund. If this is what you want then why not use SFAAX? It's yield is too low for me at 1%.
Comments
A higher barometer reading indicates that there is more investment value in the Index over a lower reading. Thus, there is more investment value in the Index (by the barometer's metrics) with a reading of 180 vs a reading of 175 or less. I use the number 160 (or better) for me to consider any equity buying; but, only if I have an open to buy within my portfolio's asset allocation. Currently, I have an open to buy within my asset allocation and with this high barometer reading I have now started my buying process. I plan through select buying to raise my equity allocation from it's 40% current range to the new target range of 45%. I'll do this in steps, of course, as market conditions can change quickly.
By the way, the futures are down this morning. However, I'm still with my thoughts that a floor is starting to form. However, currently the markets are very news driven so I am still looking for some good volatility to take place from time-to-time based upon daily news and related events.
I'm not looking for new stock market highs to take place in the nearterm; however, I do expect to see some improvement in valuation. Remember, we are in the early to mid statge with the virus and the Presidential election is also approaching.
Skeet
I'm a little confused, probably not enough coffee ! It reads to me as though your portfolio is all in cash ?
Derf
By the way ... the barometer is back to a reading of 180+.
With this, I've still have my equity buying britches on and favor equity income over fixed income.
Old_Skeet
I'll be watching for a few days & see how things go. More shut downs yesterday & most likely more to come. Schwab put out notice yesterday that satellites will be closed shortly, after 20 /th if I remember correctly.
Good health to all, Derf
The barometer as of market close Thursday maintains its reading of 180 indicating that the S&P 500 Index is extremely oversold. I am also detecting that a bottom is forming as three of the data feeds and influences that the barometer use are green lighting. Naturally, this is a process and there is still a good bit of market votatility that most likely will follow. But, things look to be improving for equities.
Old_Skeet has been reducing cash and raising my allocation to equities. With this, I have temporairly moved to a 15% cash, 40% income and 45% equity allocation to play the anticipated equity rebound. Currently, I favor equity income over fixed income as equity income has been beaten up pretty badly, thus far, while fixed income is now starting to feel the effects of the storm. My fixed income sleeve is down, for the rolling week, by -7.8% while my domestic equity income sleeve is down -3.1% and my global equity income sleeve is down -5.5%. Thus, I'm thinking equity is the better move at the moment as it is showing some rebound life.
With this, I continue to shop the equity income isles for bargins as the short volume for the Index has been in decline for the past three days. In addition, I am also nibbling in the growth area of my portfolio.
Take care ... and, I wish all ... "Good Investing."
Old_Skeet
I thought I'd include with this weeks blurb a link to Morningstar's Market Fair Value Graph. It reflects that stocks in general are at about a 28% discount. https://www.morningstar.com/market-fair-value
For the week, I was a buyer of equities at the 29% decline mark with also having bought earlier at the 8%, 13%, 19% & 27% decline marks. I most likely will continue to buy equities, at a slower pace though, as long as they remain in bear market territory; and, there is a fit for them within my asset allocation. However, my advisor/broker thinks I should limit my next two equity buys to the decline marks of 36% & 44% (if reached). In doing this would put my average equity buys at the 25% decline mark. For equities I'm still with buying in my equity income funds (IDIVX & INUTX) and in growth area in (KAUAX). In addition, the feeling is I should buy some on the income side of my portfolio since income has taken a beating of late. With this, I'm looking at real estate (FRINX) and muni's (FLAAX). In addition, I'm thinking of buying some more of CTFAX as it recently went from an equity allocation of 15% to 60% this past week. This asset move in of itself (by CTFAX) increased my overall equity exposure by better than 1% and reduced my income exposure by a like amount. My three best performing funds were PCOXX & TTOXX +0.01% ... IDIVX -0.99% ... and TSIAX -5.35%.
With equities taking the beating that they have in this downdraft (and to play the eventual rebound) I am temporairly moving to a 15% cash, 40% income and 45% equity allocation. This will be done in steps, of course, and based upon stock market movement.
In compairing myself against a 50/50 portfolio split between SPY (down -32.5%) & AGG (down
-7.75%) puts the model portfolio off it's 52 week high by about 20% which is in line with some of my asset allocation funds and where I bubble as well. However, the 50/50 model has a yield of 2.25% while I'm at a yield of 3.75%. Now being retired, I'm invested more towards income generation more so than capital appreciation although that is important, to me, to offset inflation.
My late father's asset allocation was 25% cash, 25% bonds, 25% stocks and 25% real estate. He felt that they would cycle at different times and while one might be falling another would most likely would be rising. But, that was way back then when you could make something off your cash. This asset allocation model would be off its 52 week high by about 16.6% with bonds and cash acting as stabelizers.
Thanks for stopping by and reading.
Take care ... and, I wish all ... "Good Investing."
Old_Skeet
This past week, the weekly short volume average increased, a little, from 59% to 60% of the total volume for SPY. However, the VIX (which is a measure of volatility) declined from a reading of 62 to 54. This is good as the stock Index's valuation gained ground during week moving from a reading of 2305 to 2541 for a gain of 10.2% but has a decline of 25% from it's 52 week high. With this, the Index remains in bear market territory.
From a yield perspective, I'm finding that the US10YrT is now listed at 0.68% while at the beginning of the year it was listed at 1.92%. With the recent stock market swoon the S&P 500 Index is currently listed with a dividend yield of 2.29% while at the beginning of the year it was listed at 1.82%. As you can see there is a good yield advantage for the stock Index over the US Ten Year Treasury at this time. With this yield advantage, I'm favoring my equity income funds on the equity side of my portfolio as I'm investing more for income generation more so than capital appreciation being retired. And, I feel my equity income funds presently offer me greater total return going forward, more so, than most of my bond funds.
I also feel that the stock market is oversold; but, not so much for bonds. It seems bonds are just now starting to look more attractive due to the sell off some have received this past week due to liquidity factors. According to my advisor, with whom I speak with weekly, the good stuff is still getting sold to cover margin calls as those margined are short of cash. For some asset classes, that are thinly traded, there seems to have been a liquidity crunch which has created downward price pressure. This for some investors could mean opportunity. And, now that I have a near full asset allocation in equities I have now begun to shop on the income side of my portfolio. Some funds that are on the income side of my portfolio that I'm seeing value in along with opportunity are FLAAX ... FRINX ... and, JGIAX.
My three best performing funds this week were all found in the growth area of my portfolio. They were LPEFX +16.51% ... PGUAX +14.04% ... and, AOFAX +12.87%.
Thanks for stopping by and reading.
Have a good week ... and, I hope all goes well for you.
I am, Old_Skeet
Generally I position cost average into new positions; but, with an open to buy on the income side of my portfolio it could become a full position purchase in the near term.
In addition, the barometer's earnings feed was reset with new numbers. Currently, S&P projects that the Index will generate TTM earnings in the mid $130.00+ range over the next two quarters and in the $150.00+ range on forward estimates. I'm thinking under current projections a good valuation number for the Index is in the range of 2400 to 2800 through summer. This is quite a spread; but, there remains a lot of uncertainty as well. Please know the Index could move above (or below) these projections.
From a yield perspective, I'm finding that the US10YrT is now listed at 0.60% while at the beginning of the year it was listed at 1.92%. With the recent stock market swoon the S&P 500 Index is currently listed with a dividend yield of 2.39% while at the beginning of the year it was listed at 1.82%. As you can see there is a good yield advantage for the stock Index over the US Ten Year Treasury. With this yield advantage, during the month of March, I have been favoring my equity income funds over my fixed income funds. I have read where S&P is expecting some companies to reduce or even cut their dividend payments.
Even with anticipated reduced dividend payments, I expanded my domestic equity income sleeve during the month of March from four to six funds and rasied my allocation to equities from 40% to 45%. In addition, I did a little buying around the edges in equities in other parts of my portfolio. Since, I now have a near full allocation to equities I've now started to buy during April on the fixed income side by adding to FLAAX and FRINX. In addition, as my portfolio generates income I plan to keep buying on the fixed income side during the month and perhaps on into May. A few funds I plan to add to (and position cost average these positions) are BLADX and JGIAX.
My three best performing funds for the week were all found on the income side of my portfolio. They were GIFAX +2.47% ... JGIAX +1.02% ... and, BLADX +0.95%.
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all ... "Good Investing."
Old_Skeet
I did some tax loss selling today and sold PMAIX & APIUX. I plan on putting the sell proceeds to work in the near term. My targeted buys are PFANX (new position) and funds I plan to add to are DIFAX, FBLAX, FRINX, AZNAX, IDIVX & DWGAX. Thank you @davfor for noting PFANX to me last week. I am also saving a little to add to CTFAX after it makes its June distribution which I estimate to be a sizeable one.
I am still with my plan to direct the portfolio's income generation into the income sleeve with targeted buys in BLADX, FLAAX & JGIAX during the second quarter and perhaps on through summer.
We have added qqq pdi fxi brk.b vanguard2045 past few days. Slowly dca
Hope economy recovers with limited openings soon
With this price movement today the Index moves from being oversold (with a reading of 165) to undervalued (with a reading of 160) on the barometer's scale. Generally, a lower barometer reading indicates that there is less investment in the Index over a higher reading.
For me, I have been enjoying the stock market rebound and still with my plan to position new money on the income side of my portfolio. This is to help maintain my current asset allocation of 15% cash, 40% income and 45% equity as equities are having a good upward run plus I was a buyer of equities during the downdraft.
My three best performing funds for the day were PMDAX +4.5% ... FRINX +4.4% ... and, PGUAX +4.0%.
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all good investing.
Old_Skeet
From a yield perspective, I'm finding that the US10YrT is now listed at 0.73% while at the beginning of the year it was listed at 1.92%. With the recent stock market swoon the S&P 500 Index is currently listed with a dividend yield of 2.14% while at the beginning of the year it was listed at 1.82%. As you can see there is a yield advantage for the stock Index over the US Ten Year Treasury. With this yield advantage, for stocks, during the month of March I favored my domestic equity income funds over my fixed income funds for new money; and, I expaned this sleeve from four to six funds. My domestic equity income sleeve gained +8.7% for the week while my global equity income sleeve gained 7.4%.
Since, I now have more than a full allocation to equities, at 48%, I've now started to buy on the income side of my portfolio. Since, cash will likely pay very little, in the form of yield, I have changed my asset allocation. My new asset allocation is 10% cash, 45% income and 45% equity. This is to take advange of the nearterm rebound that bonds are expected to receive now that the Fed's have begun to buy bonds and just within the past few days they started to purchase in the high yield sector. My fixed income sleeve gained +2.8% for the week while my hybrid income sleeve gained +6.3%. Plus, bonds will pay more in the form of yield over my money market funds which gained +0.01% for the week. This equates to about a one half of one percent yield which is hardley enough to cover purchase loss due to inflation.
My three best performing funds for the week were PMDAX +14.9% ... FRINX +12.8% ... and, LPEFX +11.7%.
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all ... "Good Investing."
Old_Skeet
Please note: The next barometer report will be made at the end of the month unless there is a barometer reading change from fair value.
For the week the Index moved upward +85 points from 2790 to 2875 for a +3.0% gain. This puts the Index up off it's recent 52 week low by +28.5% but down by -15.1% off it's 52 week high. With this, the Index remains in correction territory. The yield advantage remains with the stock Index at 2.07% vs 0.65% for the US10YrT. Short volume in the Index remains high at 69% (weekly average) while the VIX has declined to the mid 30% range. Seems, the shorts continue to bet against the rally. For the week the three best performing sectors were consumer discretionary +7.86%, health care +6.34%, and technology +4.79%.
So where does this put Old_Skeet with respect to his portfolio? As of Friday my portfolio bubbles at 13% cash, 38% income and 49% equity. My temporary rebound asset allocation is 10% cash, 45% income and 45% equity. With the FOMC & Treasury buying bonds and lending to state and municipal governemnts I'm still with my plan to continue to buy on the income side of my portfolio. I plan to soon start a rebalance process where I will be reducing my equity allocation and moving the sell procees to the income side of my portfolio. Overall, my portfolio is performing much like a conserative asset allocation fund that holds 30% to 50% equity.
For the week my three best performing funds were on the equity side of the portfolio. They were SPECX +6.42% ... KAUAX +5.89% and, AGTHX +5.83%. Year-to-date my best performing fund is CTFAX +9.59%. It is a flexible portfolio fund that adjust it's stock allocation to the movement of the S&P 500 Index. At the beginning of the stock market swoon it was 15% equity and now holds 70% equity. Sometime within the next week (or the next) I look for it to start it's rebalance process where it will begin to sell down its equity allocation, booking some profit, and increasing it's bond allocation. Based upon the S&P 500 Index's current reading of 2875 I look for it to adjust to a 35% (maybe 40%) equity allocation with the balance being in bonds and cash.
For those interested, you can learn more about CTFAX by clicking on the below link.
https://www.columbiathreadneedleus.com/investment-products/mutual-funds/Columbia-Thermostat-Fund/Class-A/details/?cusip=197199755&_n=1
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all ... "Good Investing."
I am, Old_Skeet
This week I thought I'd post the daily movement of the barometer in this way you might come to a better understanding of what went on in the market this past week in relation to stock market volatility along with the brometer's daily movement.
In review, last Friday's barometer reading was 143 with the S&P 500 Index closing at a valuation of 2875 indicating that the Index was overvalued. On Monday, the Index closed with a valuation of 2823 which produced a barometer reading of 150 indicating that the Index was at fair value on the barometer's scale. On Tuesday, the Index pulled back again closing at 2737 which produced a barometer reading of 163 indicating that the Index was now oversold based upon the metrics of the barometer. On Wednesday, the Index gained a little lost ground and closed with a reading of 2799 which produced a fair value reading on the barometer's scale at 150. Thrusday, the Index closed the day with a valuation of 2798; and, with this, there was not much that changed with the barometer's reading which remained at 150 and fair value. On Friday the Index moved upward and closed with a reading of 2837 whcih produced a barometer reading of 144 indicating that the Index had moved back into an overvalued reading of the barometer's scale. Energy was the only sector that was positive for the week and was up +1.67%. For the week the S&P 500 Index lost -1.3%.
If I had just posted the week ending barometer readings this week one could have assumed that not much took place during the week ... whereas ... a lot did. On a weekly basis the barometer reading went from a Friday to Friday close from 143 to 144. But, to really understand what actually went on you have to follow the Index's daily movement which is detailed in the above paragraph.
My three best performing funds for the week were all found in the growth area of my portfolio. They were KAUAX +2.43% ... AOFAX +2.42% ... and, FKASX +2.15%.
Thanks for stopping by and reading.
Take care ... be safe ... and, I wish all ... "Good Investing."
Old_Skeet
I have the Index moving (during the period) from a reading of 2541 to a reading of 2912 for a 14.6% gain. The Index's dividend yield moved from 2.29% to 2.05% while the US10YrT moved from a yield of 0.68% to 0.63%. With this, the yield advantage goes to the stock Index. I have the stock Index up from its 52 week low by 30.2% but below its 52 week high by 14.0% remaining in correction territory. I'm finding that the three best performing sectors, for the period, being energy ... consumer discretionary ... and, materials.
For the period, my three best performing funds were all found in the growth area of my portfolio and they were FKASX +16.36% ... KAUAX +17.79% ... and, AOFAX +15.71% Year to date my three best performing are CTFAX +10.4% ... AOFAX +2.3% ... and PCOXX +0.4%. Overall, my portfolio is performing much like a conserative asset allocation fund would; but, with a balanced towards income generation theme as my yield is above the average for a conserative allocation fund.
So ... What is Old_Skeet doing now that May is here? I usually follow the Sell In May and Go Away Axiom and do my spring rebalance. With this, I'll be going through my rebalance process since I am heavy on the equity side (at 48%) and light on the fixed side (at 39%). My current target asset allocation is 15% cash, 40% fixed and 45% equity. My neutral asset allocation is 20% cash, 40% income and 40% equity. With this, I have chosen to remain equity heavy by +5% and cash light by -5%. This is because most of my overweight is in good dividend paying equity income funds which are paying a dividend yield in the 4% range while cash is yielding next to nothing. And, I'm with my thought that stocks still have some upside left in them as we move through the year as I explained above.
At this time, I'm not sure if I'll continue with weekly updates or return to a monthly reporting format. However, I will continue to post barometer reading changes as they occur through the summer with little to no write ups in these post. In this way, those that follow the barometer will be aware of barometer reading changes for information purposes only.
Take care ... as it is now time for Old_Skeet to throttle down his investment actvity where I can more fully enjoy the summer.
Thanks for stopping by and reading. I sincerely wish all ... "Good Investing."
Old_Skeet
Derf
Have you ever considered keeping track of your portfolio's upside /downside capture and comparing it to a similarly allocated mutual fund / ETF as a benchmark?
In addition, I use to be more active and engage spiff positions more often as a source of income generation via realized capital gains. Now, I hold a good slug of CTFAX (about a 5% weighting) and I let this fund do this automatically for me. Thus, this has reduced the number of times I have been an active investor with my use of spiffs. I've got a lot of moving parts within my portfolio ... perhaps, to many for some ... but, not to many for me.
Again in review below is how I govern my portfolio as it does everything needed to meet my needs now in retirement. Why change now?
Old_Skeet's All Weather Asset Allocation.
My all weather asset allocation of 20% cash, 40% income and 40% equity affords me everything necessary to meet my needs now being in the distribution phase of investing. The benefit of this asset allocation is that it provides sufficient income, maximizes diversification, minimizes volatility, and provides long-term returns.
The 20% held in cash area provides me ample cash should I need a cash draw over and above what my portfolio generates plus it can provide the capital necessary to fund a special investment position (spiff) should I choose to open one during a stock market pullback. In addition, cash helps stabilize a portfolio during stock market volatility. Example of investments held in this area are cash, money market mutual funds and CD's.
The 40% held in the income area provides me ample income generation to meet my income needs in retirement. It is a well diversified area that incorporates a good number of income generating type funds. Some examples of investments held in this area are AZNAX, JGIAX & PONAX.
The 40% held in the equity area provides me some dividend income along with some growth, that equities generally provide, that offsets the effects of inflation plus, over time. Some examples of investments held in this area are IDIVX, NEWFX & SPECX.
My five largest positions are AMECX, CAIBX, CTFAX, ISFAX & FKINX. Two of these funds I have had positions in since my early teens AMECX & FKINX). I'm now 72+ years in age.
Generally, for my income distributions, I take no more than a sum equal to what one half of my five year average total return has been. In this way principal grows over time.
This works well for me and I have no plans to change the concept. I encourage others to develop something that works well for them and to stick with it even if is a two fund portfolio consisting of a stock index and a bond index fund. If this is what you want then why not use SFAAX? It's yield is too low for me at 1%.
What fund(s) have you consistently added to /place new monies to past 12 months
How did you do last quater /ytd [neg 7%down?] Rough estimates if you don't mind discussing/disclose