Friday File: Portfolio Updates, Positioning and more

Buy/Sell updates and news on a few companies in my Real Money Portfolio, plus notes on gold, cobalt, zinc, AIG, Alzheimer's Disease...

By Travis Johnson, Stock Gumshoe, February 17, 2017

I’ve got a hodgepodge of ideas and small news items for you this week, plus a few transactions in my Real Money Portfolio that I’ve mostly noted for the Irregulars in quick notes earlier in the week.

The market is expensive, but there’s no reason for a long-term investor to sell just because it’s expensive — it’s been expensive for a couple years, and markets can get much more expensive than you might imagine when optimism runs high among stock traders. I continue to invest regularly each month, trying to be secure in the knowledge that I won’t be able to predict just when the overall market gets “too expensive” and hits a bad patch with 10%, 20% or whatever kind of dip.

I am worried that the investor ebullience over the Republican control of government is a bit overdone, given the challenge of actually making progress on infrastructure, regulatory downshifting, stimulus spending or tax reform that so many investors seem to believe are imminent… but that doesn’t mean I’m selling.

It does mean that I’m being a little more cautious with speculative positions, and being mindful in particular of my exposure to interest rates and inflation — if we assume real stimulus comes, both ought to both rise. Assuming, of course, that we’re not looking at some other “black swan” event in what has become a thoroughly unpredictable world when it comes to geopolitics, or that the expected stimulus impact isn’t overshadowed by “trade war” type events that sway currencies and create new winners and losers in the marketplace. And I must remember to be mindful not just of diversification across sectors, but across various big picture themes that drive stock returns in multiple sectors. If interest rates rise and the dollar rises against other currencies, for example, that doesn’t just put pressure on dividend-paying stocks and other income investments, or on US exporters, it also puts pressure on gold.

So I’m being mindful of diversification, and I’m a little more prone than usual to take profits on big jumps, or to set relatively tight stop losses for stocks in which I don’t have long-term conviction or where the valuation makes me quite nervous.

There are some positions that I would almost certainly buy more of if they hit a soft patch without any fundamental change to the business prospects, like Berkshire ...

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