Conservative. Smart. Investing.
Dear Friends,
Again, I apologize for not updating this portfolio more often. I promise to do better. I have dumped nearly all of the former stocks (for example, I dropped DST at 112 a few months ago). But I am retaining AAPL, CELG, ORLY, and SKWS and adding 5 new picks. Here is a round up of my thoughts:
I inadvertently omitted Verizon (VZ). It remains a core holding as it pays an attractive, safe dividend.
Thanks,
Dan
Dear Friends,
I apologize for not updating you on my portfolios. Yes, I have been busy, but also I have been a bit reluctant to speak, given the poor performance of some of my picks. But today, I will go over the Core Portfolio and offer my opinions and updates on each stock:
Despite the 1.4% increase in the S&P500 index last week there is no reason to believe that this market is changing its tone. The attached technical charts still are negative for the S&P, including now a SELL signal on the S&P weekly.
Last week I wrote that you should keep an eye on the S&P for a fall to 1880. We are here.
The market is oversold in the short term. You should fade the increases by selling into them to further lighten your equity position. The downside risk is far higher than the potentially missed upside opportunity.
Last week I wrote:
“The holidays have left us with a feast of mixed signals. But for an intermediate term investor there is considerable doubt about this market. Small companies are not confirming, the recent advances have been on low volume, and long term indicators are decidedly negative. A 75-25 asset mix of bonds/cash to the S&P still seems the appropriate mix of risk and reward. As volume picks up in January we’ll get a better indication of market direction.”
As you can see from the 7 year picture of the S&P 500 chart below, we are seeing a mix of signals. MIcro and small caps are decidedly bearish, and the large caps are up over 1% since the last posting two week ago and while they appear to be good in the short and intermediate term periods, you can see in the last chart there is weakness in on the 5-min chart.
The S&P closed at nearly unchanged during a volatile week last week. According to the technical model the market is SELL for all size equity indexes in all periods. Bonds are still favorable despite the Fed decision.
For some time now the technical model has advocated being 75% in cash/bonds and a max of 25% in market-correlated equities. Just a review:
August 27: S&P at 1987. Allocation recommended at 75% bond / 25% equity.
There hasn’t been much to discuss for the longer term investor since my last (September 9) note. While the overall market has risen, it is a weak market rise. You can see it in the technical data below.