saturday finances—my october portfolio

A financial novice navigating in a choppy market



Q4 2015

The Not-So-Big Surprise
  • The highly anticipated September interest rate hike did not happen.  China was wonky, so it made sense.  And, we're still waiting.  Maybe this month...maybe by December.  Everyone is expecting a hike of around +0.25%.

The Market Tightened, Anyway
  • The market tightened because investors are building up their cash positions.
  • The market tightened because the cost of oil per barrel is still lower than the cost of production for unconventional sources like shale.  Higher production costs mean less fracking & drilling.  (A little less fracking & drilling won't kill us.)      
  • The market tightened because China was busy devaluing the yuan in an orderly Chinese manner.  That means selling off foreign exchange reserves, like U.S. Treasuries and bonds, which leads to less liquidity in the Chinese market, but it's okay!  The Chinese have it under control.

A Trotting Bull
  • The charging bull we've all been gleefully riding since 2009 finally slowed down to a trot.  

Welcome to the Herd

  • Our sturdy American bull currently shares the field with skinnier bulls and maybe an emerging calf, or two.  Like it or not, the U.S. economy is part of a global market and what goes on overseas affects how U.S. markets behave every single day.  
  • QE (quantitative easing) & QT (quantitative tightening) are forces that drive the global economy.  When deflation brought down the global economy in 2008, the Fed (the U.S. central bank) and other world banks jumped in with truckloads of QE.  Trillions of assets purchased by the major central banks easily exceeded the deflationary decline in currency reserves, which contributed to a recovery in asset prices.

My New Stuff
My aggressive-growth portfolio is always on the hunt for good stocks at low prices.   

We are still in a mid-cycle business phase, moving toward a late cycle.  Over the past two weeks, I've been evaluating my sector allocations.  I am slightly overweight in tech, consumer defensives (staples), and utilities, but I lightened up some of the older inherited stocks and added some cyclicals.  Newer tech stocks will be watched carefully as we nudge closer to the late cycle.  


My new stocks   


  • Chemed (CHE) — Healthcare /Hospice
  • Hologic Inc (HOLIX) — Healthcare /Medical Imaging for Women's Heathcare
  • Tesoro Corp (TSO) — Petroleum Refining & Marketing
  • Valero (VLO)— Petroleum Refining & Marketing
  • Nike (NKE) —Consumer Cyclical /Footwear & Accessories
  • Target (TGT)— Consumer Staple/ Discount Stores
  • Kroger (KR)— Consumer Staple/ Grocery Stores 


Keepers
I have 2 bond index funds—Fidelity Total Bond Index (FTBFX) and the Vanguard Total Bond Index (VBMFX).  They've been performing well, so I'm keeping them for the duration.  

Nothing New
My asset allocations (sectors) and my market cap/valuation styles are aligned with the Dow Jones U.S. Total Market Index.


Helpful Articles
Why Diversification Matters (Fidelity Learning Center)

What's ahead?  Best ideas from five experts (Fidelity Viewpoints)



happy hunting


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