2/5 Portfolio Update

2012 has seen a great start to the equities market.  Fundamentally, the economy appears to be getting stronger, consumer sentiment seems to be positive, the European debt crisis can has been kicked down the road by the powers that be and most importantly, (apparently) jobs are being created here in the US of A.  

Technically, things are looking good as well.  The S and P is trading well above its 50 and 200 day moving averaged and as of 2/2 the IYY and IVV reversed back into a positive trend relative to the money market.  I have been on the sidelines now for a few months and missed out on a nice run up in the US markets and that is OK with me.  I like to invest when there is a real direction and flow with the momentum.   It appears as though there is now some positive direction.  Problem is, markets are now in overbought territory because things have come so far so fast.  

I'd be looking to be a buyer here but not all at once.  I'll be buying on down days only.  Let the market allow you to enter, don't force your way in.  I like widely traded total market ETF's here, Large Cap US dividend payers and maybe a little exposure to emerging markets.  For some extra sizzle, I like some of the residential real estate REITs with high dividend payouts.  I will also be keeping some exposure to gold and corporate bonds, but no cash. 

Since I am on a bit of a vacation, I'll update the portfolio later... when I actually make some purchases.  For now as a guideline I envision it looking like this:  70% Equity, 20% Corporate Bonds, 10% Gold (0% Cash... eventually, after strategically re-entering the markets).   The Equity break down will be something like 50% Large Cap US, 25% Emerging Markets, 25% REITS.  

Enjoy the nice investing conditions, but enter with care and patience.

11/30: Portfolio Update

With the market's positive retaction to the Central Bank's action and the early positive results out of the retail sector I am removing all short positions from the portfolio.  The IVV has blown right through its 50 day simple moving average which is generally a nice first signal towards positive trend change, but I am not a buyer just yet.  I am going to sell the short ETFs on any market pullbacks in the next few days and am going to keep watch for more signs of positivity.  I will hold the GLD and the LQD and look to strategically deploy cash here in the next few weeks if needed.

As of this morning the portfolio is underperforming the market by 1% for the year... for the first time all year due to the quick turnaround in October.  As you remember, that is when the shorts were deployed and we had a pretty sharp snap back rally that stunk up the portfolio's performance.  Now I will eat the losses at around 10-13% in the red on that part of the portfolio.  Ugh...

I will also update the stats of the portfolio when I make the changes.

Let's hope things are actually getting better this time... I am not sure if that is the case, however, so tread lightly if you are going long again.

Happy investing... and have a safe and happy holiday season!!

10/27 Portfolio Update

So...  uhh.... if you have been paying attention, the October 3rd portfolio changes have not really panned out.  In fact, they seem to be dead wrong.  The S & P has made a drastic 'about face' from about the 1080 level to 1240 in just under one month.  Roughly a 14% gain.   I am holding fast to my positions but I fear that the relatively positive news out of Europe's debt problems this morning will be enough to force changes in the technical picture once again and as a result, I will likely have to sell the short positions at a bit of a loss.  But I will not be happy about it because I don't believe we are out of the woods just yet.  When I see jobs being created, I will feel more confident about the state of things.

This type of market is the one market in which relative strength has a difficult time performing.  Very volatile markets with prolonged swings up and down can create "false positives" so to speak and it does nothing in the way of tracking real time global events.  So what has happened in the past month to make markets change their mind so dramatically and what portfolio action needs to be taken?  Technically the markets were very over-sold around October 3rd so I was expecting to see a bounce up, but shortly after that, several fundamental positive news items (or better than negative news) started coming in which compounded the upside activity.  Libya was liberated, Wall Street was Occupied, fewer people are filing for unemployment (which is a bogus stat), earning season is not all that terrible and the biggie, the EU bailout plan seems to be shaping up in a way that makes markets feel better.

(Sidebar: It is hard to believe that we are still talking bailouts and debt restructuring three years later, but it is even harder to believe that markets are eating it up once again.  Show me jobs and show me growth and show me fundamental change in the way things are done.  Then I'll really feel a bit better about things.)

Regarding the portfolio... Despite recent positive market activity my indicators have not yet switched.  For now, I am keeping the portfolio at 50(ish)% cash, 25% investment grade bonds, 10% gold and despite the pop to the upside, 15% short the market.  When the time comes, I am in a position to pounce but for now, still very defensive.  Here are the portfolio results YTD and positions since the switch in early October.  Not very impressive compared to a month ago, but all things considered, not bad...

Benchmark Comparisons

	Jan 24, 2011	today	% Change
My Portfolio	$99,994.75	$96,018	-3.98%
S and P 500	1282	1242	-3.12%
FTSE 100	5943	5683	-4.37%
Commodities Index (GSG)	33.99	32.79	-3.53%
20 Year Treasury (TLT)	92.43	112	21.17%

Holdings Since 10/3/11
Cash	Type	Ticker	Weight	Shares	Starting Price	Total Starting Value	Current Price	Total Current Value	% Gain (Loss)
Money Market			48.74%			$46,800		$46,800
Bonds
Investment Grade	ETF	LQD	26.36%	222	$113.47	$25,190	$114.02	$25,312	0.48%
Commodities
Gold	ETF	GLD	10.80%	62	$161.25	$9,998	$167.20	$10,366	3.69%
Short	ETF	PSQ	7%	193	35.42	$6,832	30.4	$5,864	-14.17%
		DOG	9%	189	46.47	$8,784	40.6	$7,675	-12.63%
			102%
						$97,605		$96,018	-1.63%

Major Market Technical Changes

Every few years at there is a turning point in every major market cycle and the relative strength relationship between the stock market and the money market switches.  In bull stock markets, the arrow points towards favoring stock ownership and in bear stock markets, the arrow points to holding cash.  There are several other pieces of information critical to successful portfolio management but this one, in my opinion, is the most telling.  This is the final and most important technical measurement I follow and the one that in many opinions dictates a critical tipping point for the longer term direction and momentum in the markets.  Market activity on October 3rd, finally tipped the momentum to holding Cash, a very defensive portfolio position. The last time this indicator changed directions was when it turned bullish in April of 2009 with the S&P 500 at 865.

Now, a logical bounce has followed so I am considering any up day in the market a good day to add to my position of short side ETF's.  DOG, PSQ and FAZ (3x's financial bear) are a few of my favorites in a market environment like this.  I will not usually go over 25 or 30% of the total portfolio into the short side as I am not that risky but, I will indeed short the market.  If you are investing inside of a 401(k) and do not have the ability to own short side vehicles, don't worry. If you are on the sidelines and protecting your principal, that is enough defense for now.

I have not yet updated portfolio holdings or performance in some time as 'daddy duty' has taken over my life, but I plan on deploying about 25% of my cash on the sidelines into an equal portion of the three previously mentioned inverse ETFs over the next few days.  The portfolio will have about 40% Cash, 25% Investment Grade Bonds, 10% Gold and 25% inverse or "short" ETFs.

I'll update the charts and scorecard in a bit but for now, if you have not gotten defensive in the past few months, there is still time and I highly recommend it.  Better to be safe than sorry.

Good luck and happy investing.

9/23 Portfolio Update

Our new baby, FJ, is blissfully rocking away in the swing so I finally get 10 minutes to update the blog and add my two cents on what to do in the face of the current state of the financial markets.

If you want to see some scary price action, just look at the chart 5 year chart for the TLT and overlay the S&P 500 for the same time period.  The meteoric rise in treasury prices alone tell us that investors are in fear mode again and running for the exits at the stock markets.  We have already prepared for this mass exodus and are comfortably waiting on the sidelines in 50% in Cash.  Look to begin to enter into short side stock ETF's soon.  For now, I am staying away from treasuries as it is likely, I missed the boat on them and they are a bit too pricey for my likings here.

We could see this decline coming in stocks for some time now, but there has been an far quicker reversal in the sentiment around the precious metals.  Yesterday, silver officially reversed trends and turned south so I am going to liquidate my holdings in SLV this morning... likely at a 3-4% loss for the year.  Disappointing for sure, but I can't argue with money flows and trends.  Gold still sits comfortable above any major trend reversal points and despite its recent struggles, it is still "the other safe haven" from a plummeting stock market.

After I make my portfolio moves I will balance my portfolio to 65% Cash (for now), 25% Investment Grade Corporate Bonds (same as it has been) and 10% Gold (Same).

Here is the portfolio performance year to date.  Still over 1100 basis points ahead of the market, but disappointingly in the red for the first time in 2011.  I am kicking myself for missing on the treasuries, but I am comforted by the fact that in 2008 they dropped off the cliff the second the market started to turn in 2009.  I am happy waiting on the sidelines in 65% cash and am ready to pounce when money flows start to change again.

	Jan 24, 2011	today	% Change
My Portfolio	$99,994.75	$99,819	-0.18%
S and P 500	1282	1129	-11.93%
FTSE 100	5943	5282	-11.12%
Commodities Index (GSG)	33.99	30.29	-10.89%
20 Year Treasury (TLT)	92.43	123.12	33.20%

8/18 Portfolio Update

No changes... just a performance update...

Portfolio is performing well since we made the big changes two Fridays ago.  Year to date, we are holding on to a 2.2% gain vs. a negative 11% for the S&P 500.  Remember, defense wins championships and now is the time to be playing defense.  

There are, as always, many different opinions out there as to what is going to happen next.  Lot's of folks trying to pick a bottom... some saying its a good time to 'dollar cost average' into stocks now and some saying just ride it out.  Read my lips..  I.. do.. not.. care.. what anyone has to say on the matter.  Don't get me wrong, I listen and I am interested, I just do not make portfolio decisions based on opinion or guesses.  I have my process of tracking money flow and measuring relative strength and I am sticking to it because it works for me.  Right now... Today...  I am happy to be 50% cash, 25% metals and 25% investment grade corporate bonds and playing it safe and my portfolio is rewarding me.  If my indicators change, I'll be ready to pounce and I will tell you about any moves I plan on making.

	Jan 24, 2011	today	% Change
My Portfolio	$99,994.75	$102,196	2.20%
S and P 500	1282	1140	-11.08%
FTSE 100	5943	5092	-14.32%
Commodities Index (GSG)	33.99	32.42	-4.62%
20 Year Treasury (TLT)	92.43	110.29	19.32%

Holdings Since 8/5/2011
Cash	Type	Ticker	Weight	Shares	Starting Price	Total Starting Value	Current Price	Total Current Value	% Gain (Loss)
Money Market			50.00%			$50,306		$50,306
Bonds
Investment Grade	ETF	LQD	25.00%	222	$113.47	$25,153	$113.55	$25,171	0.07%
Commodities
			25.00%
Gold	ETF	GLD	10.00%	62	$161.25	$10,061	$177.55	$11,078	10.11%
Silver	ETF	SLV	15.00%	395	$38.23	$15,092	$39.62	$15,641	3.64%
						$100,612		$102,196	1.57%

Never forget that if you lose 50% on your portfolio, it takes a gain of 100% to recover your losses.  The name of the game is to not lose money in down markets and make as much as you can in up markets.  It is not to buy low and sell high.  Nobody wins at that game.