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Coffee 'n' Creative Destruction: Outlook, 2011

|Includes: Apple Inc. (AAPL), APOL, C, COP, EXC, INTC, KO, MRK, PG, UUP, VXX, VZ

Since Tuesday, Dec 7th volume on the S&P has averaged right around 4.5B, and the index has risen from 1223 to 1243. The analysis in my last post has been correct so far, thus I've been pretty much staying the course in my own portfolio. It's hard not to buy a little volatility insurance at these levels but I'm still holding off after selling out of my VXX position on the 7th. Traditionally a low like this on the VIX is an indicator of a top, but this feels a little different.

This past week Bloomberg posted a survey of 13 investment firms whose consensus view was a 9-11% gain on the S&P in 2011.
A common theme was commodities, high dividend yielders, and tech higher. If that doesn’t get some retail investors coming to the party, I don’t know what will. But, there’s the rub. Retail investors traditionally signal a top, right? Are we to take these so called financial experts at their word and dive headlong into this market? Actively managed mutual funds have been reporting sub-par numbers and these same firms were touting the death of buy and hold investing at the start of 2010.  

I've stayed the course for the most part this week. I took profits in KO and MRK, and added a little AAPL for a quick trade. I explained my thoughts on KO in an earlier post and MRK has been too stagnant for my taste.  VZ, EXC, PG, and INTC will be staples for me throughout 2011, and VZ and EXC have been trending positively for me lately. I’m waiting for some more upside in C and APOL before I consider taking profits there. I’m still long UUP and expect further developments out of Europe to carry that one at least through the first quarter 2011.  Lastly, I’m taking a long look at COP. I’m up over 25% right now and I keep waiting for bearish technical indicators, but they're just not happening. When/ if oil breaks down I’ll cash this one in and shop elsewhere. I’m eyeing a few small caps to add to the portfolio in 2011 as they continue to fly under the radar, even though they’ve outperformed their large cap counterparts throughout 2010.

Currently I'm 65/ 35, equities/ cash, with a 12% position in the UUP.