Shifting into Recovery-Oriented Stocks

We said goodbye to a dear old friend a few days ago by swapping out of Plum Creek Timber (PCL) and into American Tower (AMT).

The reason why I owned PCL at all, actually there were several reasons, was because timberland generally has a low correlation to equities and PCL did a reasonable job of capturing that for quite a while in addition to having a good dividend yield. It generally behaved as hoped for on the way down and started out tracking the rally that started in March, but has traded in a volatile yet sideways pattern since June.

That isn't necessarily bad in terms of whether to keep it as a long term hold, but looking forward I can see some changes in the portfolio. Other than PCL the material sector has been a source of volatility for the portfolio and a good sector to add foreign exposure. With the dollar down so low right here I don't necessarily feel the need to add more foreign exposure in the immediate term, regardless of the sector, right now.

In buying AMT I am adding exposure to an area where I think money has to be spent in the US: increased wireless traffic. And, although it is not a terribly volatile stock, I expect it to be more so than PCL. So, if the market rockets higher, AMT might go along for the ride a little better than PCL, and if the market goes down from here I have the same amount of dry powder.

Not everyone owned PCL, but for many of those folks I did buy AMT. I believe it will be an important hold for the next few years.

A while ago I made short buy list of what I expected to buy as time went on, and I've generally stuck to it but have made some changes along the way. The timing of these things may turn out to be right or wrong, of course. Obviously, just about any purchase from earlier in the year has generally worked out. But even if the US recovery is a slow one, where we are two years from the peak, that is still a decent amount of time if this isn't the 1930s. I don't think this is the 1930s, but along those same lines I think it would be more like the late 30s, so slowly getting more exposure makes some sense.

Comments

[Tony Petroski:]

" I don't think this is the 1930s, but along those same lines I think it would be more like the late 30s, so slowly getting more exposure makes some sense."

Sensible.

Nov 03 11:40 AM

[Plant the s...:]

There seems to be a lot of commentary on SA suggesting the 30's. I think this more like the 1980s to me.

Nov 06 03:20 PM