I have a generally negative outlook for domestic stocks for 2006. Long term readers will know I have been overweight foreign, oil, materials and yield. I have been underweight tech, financials and beta.
Today that mix worked. The S+P 500 was down 1.83%, my generic, composite, client portfolio was down 1.16% (any individual client may have done better or worse).
Do not take this as bragging, please take it as a portfolio can be constructed to what the builder wants it to do. I have a couple of things that were down much more than 1.83% today and a couple of things that were up a lot. I would expect any diversified portfolio to have some up and some down.
I have made a conscious effort to try to have portfolios not look a lot like the S+P 500. The things I have written about over the last months speak to this. Today was just a microcosm. There is no way to know if today's results would hold up for the rest of the year if the market finishes down 10% and I made no other trades. I would hope so, but I don't know.
If I thought 2006 was going to be up a lot I would be overweight tech, financials and beta and not be very concerned about yield. This sort of how the market works analysis is not the toughest part of the job.
It felt like CNBC was trying to whip up emotion (no shock). Hopefully this post and the last one convey how little emotion I spend on my work. There was nothing that happened today in the market or affecting the market that hasn't happened before. I guarantee that if you have devised an exit or defensive strategy for your portfolio you will have to implement it at some point. Maybe I can guess when and maybe I can't but no amount of emotion will alter this fact.
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2 comments:
I was likewise pleased with one of my portfolios dropping only 0.1%. Key contributors were: HSGFX(+0.2%), RSNRX(+0.3%)EUROX(+1.5%), TAVIX(+0.4%), two muni cefs(MVT and MHD, +0.5%), which counter-balanced the other holdings(FISMX,FSCOX,ANDEX,FEMKX,RSPFX and RSVAX). I know my portfolio is less volatile than the S&P 500, but I am pleasantly surprised by today's results.
I found it funny that my portfolio's performance was exactly the same as yours today, down 1.16%
unlike yours and the previous comment's author, my portfolio didn't have a big gainer to offset anything. it was just simply because everything was not down as much. the only non-US holding I have is SNP. it is in fact one of the few that went up today. I guess your stradegy works (having foreign market hedged against domestic). I am not too crazy about owning stocks in companies in other countries. Besides, I have enough foreign exposures in real assets.
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