Portfolio Thoughts: Awaiting a Pullback, Avoiding Banks, Accumulating Cash

by: Soos Global Capital

BEAR IN MIND: this is NOT in any way meant to be investment advice! It is merely some food for thought based on Beware Potential Potholes Stemming From Growing Global Currency Wars, this week's Soos Global Capital weekly outlook post. Each investor is responsible for his/her own investment decisions and should not take what is in this article as advice as to what is appropriate for their unique situation. The comments in this section reflect positions in accounts that we manage for our clients. Our client accounts are tailor made for each investor based on his/her unique financial profile and risk tolerance. Please read the disclaimer at the end of this article and remember that opinions expressed here can change without notice:

  1. Beware of the market overall. I mentioned this in last week’s article and I still have this overall concern. I’d feel much better if strong US growth led to strong equities which in turn drove commodities higher…but that doesn’t seem to be the situation. That said, frequent readers will know that I’ve been adding to my equity exposure on market dips, focusing my buying on global companies who have meaningful amounts of their business in Emerging Markets and in developed countries around the world, such as Caterpillar (NYSE:CAT) and Deere & Co. (NYSE:DE). I also own Australia, Asia ex-Japan, Brazil, Germany, China and the BRICs ETFs. In addition I have some direct exposure such as Telefonica (NYSE:TEF), Vodafone (NASDAQ:VOD), Teva (NASDAQ:TEVA) and Petroleo Brasileiro (NYSE:PBR). My cash position, which is still rather large, is being patiently (very patiently) placed on the sidelines with the hope of taking advantage of any market pullbacks that we expect to face, especially given how choppy rather than trendy the markets have been.
  2. Beware of banks. The “mortgage foreclosure fiasco” could snowball into something awful for banks. I am long (very) Citigroup (NYSE:C) despite these concerns, though, as I anticipate that government ownership is coming to an end, and many signs point to the ‘bad bank’ component delivering on their mission of ridding C of its toxic assets. This, though, should be watched very closely as what people are calling “foreclosure-gate” continues to unfold.
  3. On my “wish I owned” and “wish I owned more of” lists, I have names such as FedEx (NYSE:FDX), Cummins (NYSE:CMI), 3M (NYSE:MMM) and Posco (NYSE:PKX). In addition, I’m evaluating GE on the heels of its earnings announcement last week. Many of the issues that I raised in “It’s Not Your Father’s GE….or is it?” were evident in the earnings announcement….namely, a refocus on core businesses, an improvement in GE Capital, a continued push into global growth especially into Emerging Markets countries, and a strong financial position. I’m watching each closely and determining appropriate entry levels in the context of my overall cautionary stance on markets in general.

The market waters have been and remain quite choppy...very choppy. Navigating them successfully is going to require a broad global view, patient use of cash, and a continual re-evaluation of the global landscape and re-valuation of asset prices as events evolve.

Disclosure: Long: C, MMM, PBR, TEF, VOD, TEVA, DE, CAT, ABT, SWK, XLNX, NUE, EXC, SLB, SPX, FXI, EWG. NOTE: All countries mentioned in this article are or could be owned via ETFs. Companies listed in the article could be owned by client accounts. All assets mentioned in the article could be traded at any time without notice.

Note: This article is meant to contain thought provoking views and is NOT investment advice. As always, please read IMPORTANT DISCLOSURE INFORMATION by hitting this link to the "Soos Global Capital's Company" section of the Profile page.

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