Monday, August 01, 2016

The surprising strength of equities

In July, stocks advanced slowly but meaningfully during the month.  From the mid-February lows, they are up almost 20%.  Today was a mixed day, not unusual.  The S&P and Dow were down modestly but the Nasdaq rose by a higher percentage rate.  All in all, one could say it was a flat day to start August.

Other than the lack of investment alternatives, there is no significant reason for this performance. From the beginning of 2016, across the indexes, aggregate stocks are up somewhat more than 6%, not including dividends. Here in stock picker's land, the returns in four somewhat equity weighted portfolios have been fine, and modestly stronger.  Given the risk involved in some of the choices, the portfolio is vulnerable to a negative change in sentiment, but what's new.  It has evolved into a more large cap, strong balance sheet, dividend paying portfolio in the last two years.  The number of stocks held now that are small and mid cap stocks that could be characterized as swing for the fences bets are fewer than in year's past.  The ideas have not been forthcoming.

Right now, just standing still, although it feels like a time to think about taking some gains selectively.


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