Market-based Portfolio Assessment
The major market indexes took a bit of a hit today and I thought I'd take a quick review of my portfolio in co ordinance with that action and how it may affect things. First, I feel we are seeing two major news events impact the markets right now. The primary focus is related to North Korea and the potential that they just tested a hydrogen bomb. While the situation and potential scenarios are certainly alarming, I currently do not see them having an impact on my portfolio looking out twelve to eighteen months. Times like this typically draw panic and it's better to be prepared to handle that panic than it is to join in the foray. The second event is Hurricane Irma forming into a Category 5 storm in the Atlantic. Current path projections have the storm most likely going right up through the Caribbean and through Florida and some of the southeast coast. Category 5 hurricanes produces mass amounts of damage and has the potential to rival that of Harvey, which we're just starting to get a perspective on damage impacts.
So what does all of this mean for my portfolio and what actions might I take? I'll take a brief look stock by stock below, but in general, I'm mostly sitting still. Many positions have a very low cost basis and I won't violate it just because of these events, though it's possible there may be opportunities to buy more shares. I have a couple holdings I should be more disciplined in and take my investment out of them, but that's not necessarily likely when a market is pulling back on news events. And then there are some I might look at getting into at the right prices. In all, I want to do my best to limit my downside risk where I can/should and be ready to buy solid companies at good prices to take advantage of the worry. With that, here's what I'm thinking:
Citigroup (C): Neither of these events have a direct impact to bank stocks. However, the increased worry does make people feel to treasuries and drives down the yield. Add into that the numerous reports that have been coming out regarding growth and inflation rates and you'll notice it becomes less likely that the Fed hikes rates another time this year. As such, don't be surprised to see bank stocks pull back more like they did today. Citigroup is below book value again and it won't be until the $64 or under area that I expect they'll start buying up stock and putting in a floor. You may want to buy shares there too, but I won't be due to position size and cost basis.
iShares MCI Eurozone ETF (EZU): Given this index is for companies based in the European Union, there should be no impact, given European companies and countries have little to do with either of these stories. That said, it's possible that we see a market wide sell off induced by fear give us some opportunities. I'm looking at buying another chunk below $40.50, if I can get it.
Cedar Fair (FUN): Cedar Fair is going to be impacted by the presence of the hurricane. Given that it is part of a leisure and travel segment that will be getting pounded by the hurricane, this stock will get sold off with the futures indexes and ETFs. In addition, there are some parks that risk impact in the North Carolina and Virginia area depending on the storm track. Just rainy aftermath from the storm's landfall can impact the already difficult goals the company was trying to achieve. This may just put the nail in that coffin. If this stock goes below $62, it would become a value, though I figure it'll be hard to press below $64. I won't be doing anything due to position size and cost basis.
Home Depot (HD): This is a messy situation. Stores in Florida are likely to close if the storm hits. We may see that up the Easter Seaboard too. After the storm, everyone will be rushing to rebuild. Having so much rebuild efforts in both Texas and this area could mean a dramatic increase in sales - if they can even keep up. But in the short term all the store closings will result in lower earnings for the year and "missed marks" potentially. This is one stock that was actually higher today as it broke out from the pattern I described yesterday. I'd like to see the stock break out a bit higher and hold at or above $153.50, ideally, to believe there's a new floor in place. Right now it could easily pull back into the range. Depending how the stock acts, I may remove my investment from the stock to have some cash to invest in new opportunities and play with the house's money. If there's strength, I will likely leave it for a bit yet.
Honeywell (HON): This is another stock in an industry that shouldn't be impacted too much by news events. If anything, it may benefit from its participation in the defense sector as there may be more focus put into ensuring border security and strength here and abroad. This has already been part of the success story so far, so I don't see a lot of added benefits. The stock has been a bit hot and is pulling back. Because of size and cost basis, I won't buy on the pull back. I may sell out my investment and play with the house's money if I get a price at or above a 225% gain again.
IONIS Pharmaceuticals (IONS): The healthcare and biotech industry will have no skin in the game of these news stories and could potentially benefit from a run to safety. We'd need to see a significant pullback in the stock to warrant buying more given my position size and cost basis. Prices below $45 would be intriguing, but I anticipate no action.
ON Semiconductor (ON): As I stated yesterday, the stock ran too much, too fast and it's already pulling back. To be fair, the entire tech sector did as people are likely locking in gains. While no one ever got hurt taking a profit, this stock has been a winner and I expect that winning to continue. My cost basis is too low to add more and if it gets to the right price I may pull out the little remaining investment I have in the stock. Overall, I anticipate no action.
Pepsico (PEP): CPG companies are yet another place people are likely to run to as a safety location as you continue to need food. The storm could impact sales a little, as I'm sure the same could be said in Houston. The long-term prospects remain intact, though. The stock may get hit, but don't expect the hit to be as heavy as other sectors. My cost basis of this stock is so low that I need a major pullback to even consider violating my cost basis. I don't see this pulling back a lot farther than a buck or so. As such, I don't anticipate any activity here.
So that's the portfolio. As I said, little to do from an investor opportunity in my current portfolio holdings. I may raise cash if the right scenarios arise and I may buy in one or two places under the right circumstances. Outside of that, what I'll be looking to do is to find valuable new holdings opportunities that I may want to invest - particularly if I do pull investments out of some of the areas described above. I hope to provide some areas of interest in the future. Until then, best of luck to all of you! Don't panic, as there's not much to panic about at this time.
Notes:
Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash. Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning.
So what does all of this mean for my portfolio and what actions might I take? I'll take a brief look stock by stock below, but in general, I'm mostly sitting still. Many positions have a very low cost basis and I won't violate it just because of these events, though it's possible there may be opportunities to buy more shares. I have a couple holdings I should be more disciplined in and take my investment out of them, but that's not necessarily likely when a market is pulling back on news events. And then there are some I might look at getting into at the right prices. In all, I want to do my best to limit my downside risk where I can/should and be ready to buy solid companies at good prices to take advantage of the worry. With that, here's what I'm thinking:
Citigroup (C): Neither of these events have a direct impact to bank stocks. However, the increased worry does make people feel to treasuries and drives down the yield. Add into that the numerous reports that have been coming out regarding growth and inflation rates and you'll notice it becomes less likely that the Fed hikes rates another time this year. As such, don't be surprised to see bank stocks pull back more like they did today. Citigroup is below book value again and it won't be until the $64 or under area that I expect they'll start buying up stock and putting in a floor. You may want to buy shares there too, but I won't be due to position size and cost basis.
iShares MCI Eurozone ETF (EZU): Given this index is for companies based in the European Union, there should be no impact, given European companies and countries have little to do with either of these stories. That said, it's possible that we see a market wide sell off induced by fear give us some opportunities. I'm looking at buying another chunk below $40.50, if I can get it.
Cedar Fair (FUN): Cedar Fair is going to be impacted by the presence of the hurricane. Given that it is part of a leisure and travel segment that will be getting pounded by the hurricane, this stock will get sold off with the futures indexes and ETFs. In addition, there are some parks that risk impact in the North Carolina and Virginia area depending on the storm track. Just rainy aftermath from the storm's landfall can impact the already difficult goals the company was trying to achieve. This may just put the nail in that coffin. If this stock goes below $62, it would become a value, though I figure it'll be hard to press below $64. I won't be doing anything due to position size and cost basis.
Home Depot (HD): This is a messy situation. Stores in Florida are likely to close if the storm hits. We may see that up the Easter Seaboard too. After the storm, everyone will be rushing to rebuild. Having so much rebuild efforts in both Texas and this area could mean a dramatic increase in sales - if they can even keep up. But in the short term all the store closings will result in lower earnings for the year and "missed marks" potentially. This is one stock that was actually higher today as it broke out from the pattern I described yesterday. I'd like to see the stock break out a bit higher and hold at or above $153.50, ideally, to believe there's a new floor in place. Right now it could easily pull back into the range. Depending how the stock acts, I may remove my investment from the stock to have some cash to invest in new opportunities and play with the house's money. If there's strength, I will likely leave it for a bit yet.
Honeywell (HON): This is another stock in an industry that shouldn't be impacted too much by news events. If anything, it may benefit from its participation in the defense sector as there may be more focus put into ensuring border security and strength here and abroad. This has already been part of the success story so far, so I don't see a lot of added benefits. The stock has been a bit hot and is pulling back. Because of size and cost basis, I won't buy on the pull back. I may sell out my investment and play with the house's money if I get a price at or above a 225% gain again.
IONIS Pharmaceuticals (IONS): The healthcare and biotech industry will have no skin in the game of these news stories and could potentially benefit from a run to safety. We'd need to see a significant pullback in the stock to warrant buying more given my position size and cost basis. Prices below $45 would be intriguing, but I anticipate no action.
ON Semiconductor (ON): As I stated yesterday, the stock ran too much, too fast and it's already pulling back. To be fair, the entire tech sector did as people are likely locking in gains. While no one ever got hurt taking a profit, this stock has been a winner and I expect that winning to continue. My cost basis is too low to add more and if it gets to the right price I may pull out the little remaining investment I have in the stock. Overall, I anticipate no action.
Pepsico (PEP): CPG companies are yet another place people are likely to run to as a safety location as you continue to need food. The storm could impact sales a little, as I'm sure the same could be said in Houston. The long-term prospects remain intact, though. The stock may get hit, but don't expect the hit to be as heavy as other sectors. My cost basis of this stock is so low that I need a major pullback to even consider violating my cost basis. I don't see this pulling back a lot farther than a buck or so. As such, I don't anticipate any activity here.
So that's the portfolio. As I said, little to do from an investor opportunity in my current portfolio holdings. I may raise cash if the right scenarios arise and I may buy in one or two places under the right circumstances. Outside of that, what I'll be looking to do is to find valuable new holdings opportunities that I may want to invest - particularly if I do pull investments out of some of the areas described above. I hope to provide some areas of interest in the future. Until then, best of luck to all of you! Don't panic, as there's not much to panic about at this time.
Notes:
Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash. Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning.
Nothing on this site should be taken as advice, research, or an invitation to buy or sell any securities. All views expressed are solely of my own and I am not a professional money manager. Please consult with your financial adviser before taking any action in your own portfolio.
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