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Now that we're up to our rears in a trade war, what defensive moves are you making or contemplating?
[hate it when my fingers don't work right]
Please note that I went defensive back in November with shifts into blue chip dividend paying stocks and similar funds (G&I, EI, etc.). I've long been an advocate of 'owning a piece of the broom' in buying stocks of companies that I do business with that pay a dividend also (e.g. my local utility, my phone carrier, my regular gas station, etc.).
I addition, I took some money off the table (1-2 units) by shifting into bonds and such. I also am still playing casino with the junior silver miners.
Now, that we're in a full blown trade war, what's next? I love some of the blue chips that pay a nice dividend. I also fear that we're going to start seeing inflation and prices go up in response to the tariffs. TIPs have to be considered (rono is already there).
I won't go into PM's because you know me and that's an old song.
None, mostly waiting to see what ends up in the bargain bin. I'm mostly in tech, healthcare, REIT's, energy and utilities with a few consumer staples around the edges so we'll see what happens. I've also learned that the less I muck around with my portfolio the better off I am.
Lately, I've added PTIAX. Divs have been lower than before I bought in, but they're still hefty. I'm happy with my 39% in bonds (RPIHX, PRSNX, and the bonds held by MAPOX and PRWCX.) I've been dollar-cost-averaging into PRIDX. It's had a few down days. I'll keep dca-vging. My foreign equity stake is at 9%.
Now being in retirement I run an All Weather Asset Allocation with my Cash Area having a range of 10% to 20% currently at 15% ... my Income Area having a range of 30% to 40% currently more towards 30% ... my Growth & Income Area having a range of 30% to 40% currently about 35% ... and my Growth Area having a range of 10% to 20% currently more towards 20%. Recently, an Xray analysis bubbled (net %) cash at 18% (including what my funds hold) ... bonds at 25% ... domestic stocks at 32% ... foreign stocks at 19% and other assets at 6%. Since other assets consist mostly of convertible securities when combined with bonds equals my above referenced income allocation at about 30%. Having ranges within my asset allocation gives me the flexability to do some positioning from time-to-time. Currently, I am underweight in my Income Area by about 5% and overweight in my Growth Area by about 5%. My Cash Area and my Growth & Income Area are positioned neturally. Overall, my portfolio (last year) generated a good bit of income with a distribution yield of 4.2% with a total return of about 14% thus growing my principal. In some years I may have a decline in principal because of market conditions and/or a high withdrawal rate. However, since, I generally only take about one have of my five year average total return my principal grows over time. This is done mostly to counter the effects of inflation.
Thus far this year what has worked well for me has been small caps, convertibles, commodities (up until late as they tend to go soft during the summer) plus cash. With second quarter earning season soon to start I look for most all equities to become engerized. The three best performing sectors within the S&P 500 thus far have been consumer discreationary, technology and energy. Combined these three sectors equal better than 35% of my equity allocation.
I have had an aggressive asset allocation.The bull market is 9 years old. Since 2015 I have slowly reduced my risk by putting the distributions in my taxable accounts(which were large enough to begin to increase my tax bracket) into money market funds and my RMDs into a savings account.
Thanks @Old_Skeet for the report. Takes a bit of time and effort to put something like that together. Like you, I use a cash allocation to add / take risk off. My cash range is the same as what you stated as yours (10-20%). However, I’m sitting near the top (20%). I would have expected a better buying opportunity by now beyond what the markets gave us in March. (Not intended as advice to others. All have different needs and comfort levels)
Thanks @Rono for this thread. All of the responses have been interesting. The guy changes his positions with the prevailing winds. So it could be a case of “Trade war on today / off tomorrow“. Who really knows what’s coming?
Thanks for all your sage advice. First, in my elder years, I only get crazy lungy occasionally and most often operate 'on the margin'. When I talk about making strategic defensive moves, I'm talking about tweaking around the periphery. Besides, I hunkered down after the Ides of November - as much as a crazy old bastard like me is apt to do.
Most of us, and particularly the folks responding to this thread, are quasi-passive investors. By this I mean that we have a core portfolio that is based upon our goals and objectives, time horizon and risk tolerance. Around the edges, we have a certain percentage of 'mad money' that we play with. However, the nut is that HOW we play with this can make a huge difference in our overall return. That is the science behind momentum investing. Just looking for the crest of the wave. Find a bit of a divergence in some segment, sector, country, region and add a wee bit to it and ride it and bingo - you just beat your brother in law for the year.
And that is why I always seek advice from you good people - because you see the divergences.
A question I received from a reader asks why I was light 5% in income and heavy 5% in growth from my neutral positions?
The short answer is to position some money into the faster moving market currents while keeping within my asset allocation ranges. My income sleeve is just barely positive ytd, as I write, while the securities I have been putting money to work in are up on average combined by about 18% ytd. Most of the securities I have been buying in of late are found in the growth area of my portfolio thus the overweight positioning. Those that I trimmed from (of late) were in the income area thus making it underweight from its neutral positioning.
Tweaking (or throtteling) my positioning (as described above) is one of the ways I use to add Alpha to my portfolio. To do this though I have to stay on top of what is moving within my portfolio and not get carried away with big asset movements.
Comments
[hate it when my fingers don't work right]
Please note that I went defensive back in November with shifts into blue chip dividend paying stocks and similar funds (G&I, EI, etc.). I've long been an advocate of 'owning a piece of the broom' in buying stocks of companies that I do business with that pay a dividend also (e.g. my local utility, my phone carrier, my regular gas station, etc.).
I addition, I took some money off the table (1-2 units) by shifting into bonds and such. I also am still playing casino with the junior silver miners.
Now, that we're in a full blown trade war, what's next? I love some of the blue chips that pay a nice dividend. I also fear that we're going to start seeing inflation and prices go up in response to the tariffs. TIPs have to be considered (rono is already there).
I won't go into PM's because you know me and that's an old song.
thoughts?
and so it goes,
peace,
rono
Regards,
Ted
Thus far this year what has worked well for me has been small caps, convertibles, commodities (up until late as they tend to go soft during the summer) plus cash. With second quarter earning season soon to start I look for most all equities to become engerized. The three best performing sectors within the S&P 500 thus far have been consumer discreationary, technology and energy. Combined these three sectors equal better than 35% of my equity allocation.
Thanks @Rono for this thread. All of the responses have been interesting. The guy changes his positions with the prevailing winds. So it could be a case of “Trade war on today / off tomorrow“. Who really knows what’s coming?
It's been a good day. We dedicated a Blue Star Memorial here in our Wacousta Cemetery. Lot's of hard work for several years by some good people.
https://www.facebook.com/148223608565444/videos/1764064743647981
Thanks for all your sage advice. First, in my elder years, I only get crazy lungy occasionally and most often operate 'on the margin'. When I talk about making strategic defensive moves, I'm talking about tweaking around the periphery. Besides, I hunkered down after the Ides of November - as much as a crazy old bastard like me is apt to do.
Most of us, and particularly the folks responding to this thread, are quasi-passive investors. By this I mean that we have a core portfolio that is based upon our goals and objectives, time horizon and risk tolerance. Around the edges, we have a certain percentage of 'mad money' that we play with. However, the nut is that HOW we play with this can make a huge difference in our overall return. That is the science behind momentum investing. Just looking for the crest of the wave. Find a bit of a divergence in some segment, sector, country, region and add a wee bit to it and ride it and bingo - you just beat your brother in law for the year.
And that is why I always seek advice from you good people - because you see the divergences.
and so it goes,
peace,
rono
The short answer is to position some money into the faster moving market currents while keeping within my asset allocation ranges. My income sleeve is just barely positive ytd, as I write, while the securities I have been putting money to work in are up on average combined by about 18% ytd. Most of the securities I have been buying in of late are found in the growth area of my portfolio thus the overweight positioning. Those that I trimmed from (of late) were in the income area thus making it underweight from its neutral positioning.
Tweaking (or throtteling) my positioning (as described above) is one of the ways I use to add Alpha to my portfolio. To do this though I have to stay on top of what is moving within my portfolio and not get carried away with big asset movements.