Sunday, July 06, 2008

Portfolio review time, ugh

For the average individual investor the last six weeks have not been pleasant. One bright spot could be that a more conservative asset allocation has been commission free as equities are now a smaller part of most portfolios. For one that believes that diversified equities---by large cap, small cap, domestic, international, emerging markets, and industry groups---are a required part of any portfolio, the collapse of recent weeks has been disheartening. Looking at, reviewing, scrutinizing, analyzing, turning upside down, chanting over, and taking breaks from a portfolio has not changed anything. There have been some changes here, overdue ones in some cases that became crystal clear in this type of environment. The fact is, however, that there is a rationale for most parts of the portfolio that still stands as long as this is not some doomsday rout. This portfolio holds some Citigroup and AIG, sad but true, but nothing to do now but sit and wait it seems, certainly not ready to jump into more yet although that time could come. Tomorrow could bring some action on a few names.

On June 19 eyesnotsold ventured here to share a jump into a Wachovia(WB) that had been, it seemed, destroyed. Now, right at the threshold of a 10% loss, forcing myself to follow some trading discipline may require exit tomorrow even though the thesis laid out here a few weeks ago still seems attractive. That's no fun at all, foul medicine to take but necessary perhaps. Then there's Insteel(IIIN). Such nice gains there that began to erode last week, so do I dare risk riding them back down or take the gains now and come back again later to a really attractive company with a pristine balance sheet and a business that is perfect for a Democratic administration ramp up in public infrastructure spending and employment. Too much trading is usually not a winning proposition but doing nothing here is not possible. Choices are forced in a market like this for an individual stock investor. But the indexes and broad ETF's, they'll just stay put through it all unless the whole game goes down. Thinking like that late Sunday must mean there'll be a little life in the market tomorrow.


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