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June 8 Portfolio Recap

The market is down over 6% from it's May 2nd peak. All indications are that we are likely to see the market enter official 'correction' territory (10% or greater retraction) as we approach Summer. I have used volatility over the last several months to produce stellar short-term returns and to reposition the portfolio defensively.

Year-to-date, we are now outperforming the market by 0.5% and our more targeted, defensive portfolio weightings have boosted the current yield to 8.2%.

Several hold-over technology trades from April, including (NASDAQ:CSCO), (NASDAQ:MSFT) and (NYSE:HPQ) have weighed on performance and currently comprise a larger than target weighting.

As we enter a seasonally weak period for the markets, I expect the S&P 500 to retest the 2011 flat line of 1,258, ultimately flirting with the 10% correction level of 1,234. With a clear weakening of the economy showing up recently in all economic data, I expect bullish responses from politicians and the Fed, especially heading into an election year. With so much political capital at stake, I expect policy moves to excite the markets, pushing us back up to the 1,500 level within the next 12 months.

Overall Sentiment:  Near-term cautious. Long-term bullish.
Portfolio Yield: 8.21%
Projection: Flat down in the near term. S&P to 1,500+ in next 12 months.

Top 5 Positions:

  1. SPDR Barclays Capital High Yield Bond (NYSEARCA:JNK)- 8.69%
  2. iShares S&P U.S. Preferred Stock Index (NYSEARCA:PFF)- 8.06%
  3. iShares High Yield Corporate Bond (NYSEARCA:HYG)- 6.76%
  4. Energy Transfer Partners (NYSE:ETP)- 5.21%
  5. Hewlett-Packard Company (HPQ)- 5.16%
Stocks: JNK, PFF, HYG, ETP, HPQ, CSCO, FTR, EXC, FE, PPL, PBI, NYCB, PSEC, NLY, CYS, BWP, AINV, LLY, EQC, FGP, HPT, TGT, OLP, AGNC, ADC, OHI, RSH, PTNR, MSFT