I'm not as optimistic about this bull as I was a month ago. In fact, I'm about 28% in cash at present. Several of my favorite technical indicators are flashing caution.
My two small stocks continue mixed. Despite the 9.4% drop in the price of gold, AABVF is up 7.7% for the quarter (all numbers include dividends) but AXPW has dropped 51% as it gets ready for a public offering and NASDAQ listing. Fortunately, AXPW is my smallest holding.
Current fund/ETF holdings include:
DSEFX purchased 8/5/14 up 2.4%
HDPMX purchased 1/7/14 up 13%
PRHSX purchased 2/6/12 up 109%
RPG purchased 3/5/14 up 2.1%
XLP purchased 3/5/14 up 8%
XLU purchased 2/5/14 up 12.5%
DODGX purchased 1/7/14 up 8.6%
MGK purchased 8/4/14 up 2.5%
PRWCX purchased 1/7/13 up 40.3%
SSHFX purchased 6/4/13 up 27.8%
The following positions were sold since 6/30/14:
PKW bought 1/7 sold 7/3 up 6.9%
VCVLX bought 5/5 sold 8/4 up 1.9%
IWS bought 7/3 sold 8/4 down 5%
JSVAX bought 2/5 sold 9/3 up 12.5%
XLE bought 3/5 sold 9/29 up 6.8%
XLB bought 1/7 sold 10/3 up 8.1%
RPV bought 9/4 sold 10/3 down 3.2%
DODWX bought 4/4 sold 10/3 up 2.9%
Note the churning compared to only one sale in the previous quarter. This is an indicator of changing leadership in the market. New leadership has not clearly manifested as of this writing. This is not a good sign!
What's going on? Weakness in Europe, renewed war in the Middle East, the Arab bomb, China and Russia flexing their muscles, weakness in new home sales here, Ebola, and a general feeling that the market may have gotten ahead of its fundamentals. The FRED portfolio equity percent reading suggests a high probability of an average 5% annual return for US equities over the next decade, which is subpar. A lot of Boomers will be retiring shortly, drawing down their savings. The month of October has bad associations for anybody who was a player in 1987.
This much seems clear: the big boys are keeping some powder dry at the moment. I'll do the same. But I won't repeat the mistake of diving into fixed income just now. Current returns on short-term debt aren't worth the trouble it takes to trade, and with such low rates on the long end we remain exquisitely vulnerable to a bond market crash when long rates go up.
People may feel better after the election.