Good morning,
I thought I’d bring back a thread that Scott used to anchor on the board titled, “What Are You Buying Selling or Pondering?” According, to
@Scott, he will be lurking and will not be as active on the board as he was in the past. I have seen others go inactive form time-to-time and then venture back as their schedules allow. Perhaps, Scott too will be back soon as a regular poster.
Currently, my buy strategy was/is to buy at certain steps during this market decline and its rebound. In review, I have recently bought at 1922 & 1880 readings for the S&P 500 Index while it was trending downward after it had pulled back into correction territory. One might say, well, that is not much since these two buys only equal a sum of about one percent of your overall portfolio’s value. That's true; but, note, this does equal about two percent of my equity valuation since my current allocation is about 25% cash, 20% bonds, 50% stocks and 5% other assets as reflected in my recent Instant Xray analysis. Currently, I plan to buy again on the upswing somewhere around 1870-1890 range … perhaps, even today. If the market runs upward today above 1900, I simply want buy; and, I'll a wait for another day. As I write, the Index is above 1900 and up about 1.2% thus far in the day. In addition, my portfolio has a distribution yield of better than five percent on current valuation (about 1.25% per quarter) so a good bit of the yield is now going back into the market while valuations are down.
Now let’s visit and study this as to what it will do for me if we have a 10% rebound in equity valuations. Since, I am now close to 50% equity; and, with a 10% rebound my portfolio should bubble close 53% to 55% in equities. Above the 55% allocation, I’ll start to sell down equities and again raise my allocation to cash. First Quarter 2016 Earnings reporting will play heavily in how far I decide to sell my equity allocation down as we approach summer. Currently, my asset allocation for equities calls for a range on the low side of 45% and on the high side of 55% with a target allocation being 50%.
According to Jeffery Saut of Raymond James we have been in a selling stampede which usually last from 17 to 25 days with some lasting longer. We will be closing in on day 17 of the stampede next week. Mr. Saut also states that it usually takes four to six times longer to recover form a stampede than it lasted. With electronic trading used by big money along with the flash crowd ... who really knows when, and at what level, the correction in the stock market will end?
So, this is what Old_Skeet has been pondering along with developing my rebound strategy.
I wish all … “Good Investing.”
Comments
I think the real buying opportunity lies ahead, much later this year or in early (Q1) 2017.
Using my very unscientific technical of AAPL as a sentiment indicator, expect a small follow through on Monday with rising AAPL and then a sell-off of the markets on Tue along with AAPL when they announce their results as it usually happens regardless of their results.
Since HY bond have a high correlation to stock performance, do you find HY bond are a leading indicator for stocks or the other way around?
Today your post prompted me to play around with historical chart performance using a HY funds (MWHYX...editted out FAGIX), an equity fund (LEXCX) and a ST Gov Bond fund (SNGVX). Using these three funds one can look back over the last 30 years.
My opinion seems to lean towards HY as a leading indicator both prior to stock sell off and prior to a stock market rebound.
Ediited to reflect Junkster's comment:
Also, I found it interesting that owning merely MWHYX (a HY Bond) since the '08 bottom (12/16/08) would have provide just as much of a return as owning LEXCX (a Stock Equity Fund) and with less volatility.
http://news.morningstar.com/fund-category-returns/
Of the nearly 100 categories, only two or three beat ABTYX, one of my favorite junk muni funds over that time period. Then again, in that other forum you have an academic who is forever ranting about junk bonds and how they have no place in any investor's portfolio.
Junk bonds have had 2 bad missteps so top speak since Milken changed the landscape there in the 80s. 89/90 and 2008. I find it interesting that on both occasions junk lead the S&P over the following three year period 91-93 and 2009-11 coming out of the depths of those missteps. I an anxious to see if we get a rerun this time around as the current situation could be considered another such misstep.
Also, take a look at PTRMX as a comparison to ABTYX. A slightly tamer downside performance over the last three years.
Bought T Rowe Price Blue Chip.
It is that time in the market cycle, and that time of the year...
did bought some restaurant bonds recently - we'll see how it goes
http://www.fool.com/investing/general/2016/01/22/is-now-the-time-to-buy-freeport-mcmoran.aspx
Have added some real estate to my portfolio -HLPPX- .....Why QE the world over? I see the dollar staying strong, so I do not think rates will rise much. Have also added to RYSBX - am looking for stronger dollar this year and added to WAVIX. On the thought that this is only a bounce and things will go lower as the fund is positioned that way.
God bless
the Pudd
Thanks for stopping by and making comment in the open thread ... "What are you buying, selling or pondering? It is appreciated. I am thinking of opening the thread a least once per month perhaps more often should market conditions warrant. If it gets opened to often, from my thinking, it will lose the interest of readers and posters and not draw the comments necessary for it to thrive. As of me making this comment the thread, in two days, has drawn 278 views.
If it were not for those that viewed and made comments the thread would not have thrived and would have been allowed to drift into the history stack of old threads.
Thanks again to those that made comment.
Let's keep it going.
Old_Skeet
Regards- OJ
In the belief that health care will find a way to prevail no matter what, I threw a tiny amount into PRHSX.
And said good-bye to ACRNX, even though the fund had done better over the past year, after PMs changed their approach. The firm's decision to cease the annual shareholders' meeting suggested its own lack of faith in itself. And ACRNX was a sort of monkey on the back: sell today? next month? next year?
Am pondering increasing position in FMIJX.
@InformalEconomist, I really like FMIJX as a core fund. Something I can really hold and forget about. I have it even in my conservative portfolio that is 70% in cash. No drama fund.
The problem with health care sector is that it is actually many different business with independent market opportunities and challenges. Medical devices is the sector I like best as a no bubble, steady growth, long time bet from the increasing need for medical care and will benefit from increasing automation. Completely different from insurers who are becoming more and more like utilities in the current trend. Big pharma is top line constrained from the increased attention on drug prices while biotechs are in a bubble and markets flooded with toxic ones that are likely to fail. One might think, let the managers worry about how to diversify within them. But unfortunately, too many managers seem to have loaded up on risky biotechs to juice their returns and/or to not fall behind peers who have been doing the same. Very difficult to judge which of them have been doing this until it is too late.
What's your thinking on HLPPX? I just closed out my position in HLLPX based on under performance relative to VNQ (my core real estate holding) and went into REZ. Also holding NHI, PGZ and VNQI in this sleeve.
Regarding FMIJX, do you know what they are shorting and how they are doing it? Have they said? Any clues/hints to that? I've been considering similar placement in my conservative collection of MFs and what-not, for the same reason. That pool of money has become too income/bond fund heavy (which is o.k., but increasingly less productive) and I think the collection could benefit from a little GARPy G&I type of injection, over a 5-yr timeline. Not to my price point yet, but one more draw-down would probably take it into my buy zone for initial investment. Portfolio management by the FMI team seems quite disciplined and has attracted my full attention.
@heezsafe: Sorry, I just recycled my latest print talk from FMI funds (from September?) and don't remember what was said about shorting.
I am truly hoping Artisan funds get their mojo back.