Why Sitting Tight Through Volatility Can Be Beneficial

October 18, 2018

 The chart below which covers 10 years of the broadly diversified US equity market (SP500) shows MULTIPLE corrections/pullbacks over that time frame. In fact the current pullback is smaller than the one as the start of 2018. Sitting tight through the volatility of this ten year period allowed someone to double their money if invested in the SP500

BUY LOW AND SELL HIGH…everyone (almost everyone) has heard this before and understands it…but this is much more difficult to put into practice.

Fear can be a handy tool for self-preservation but it can also cause us to freeze and take no action at all.

 

I have outlines a few possible actions below for a variety of my clients.

 

FOR THOSE WITH MOSTLY MANAGED MONEY (mutual funds)

  • Do nothing…managers like Eric Buschell (Signature Global Income and Growth) are actively looking after your portfolio.  For example in august they liquidated most of their technology stocks located in Asia and have increased weightings in energy stocks

  • Use cash in account to add to core positions (buy low)

 

FOR THOSE WITH ETF’s (Exchange trades funds)

  • For the most part ETF’s are passive so moving cash to these positions after the pullback makes sense

  • ADD to I-shares XAW (all country-all size companies)

 

FOR THOSE WHO ALSO HAVE INDIVIDUAL POSITIONS IN STOCKS  (this is far more complicated)

  • Start or add to BCE position (interest rate increase may be overdone)

  • Start or add to Alta-Gas position

  • START/ADD SCOTIA BANK!!!...this was about $82 at start of year and has fallen back to the $72 range  

Start/add Chemtrade position…excellent distribution of 7%+ but price is slumping

 

For those interested in picking up positions in the stocks that have been MOST BEATEN UP in the recent pullback I have identified a few and they will be familiar names.

These stocks are all part of what I call the ‘Noonan Family Portfolio’.  These are business that my family spends more on now than they did a few years ago and may be true of your family.

I started this at the start watching how my son (and the rest of the family) changed spending over the years.

 

Amazon has pulled back to its long term average.  THINK cheap delivery (amazon prime) and viewing content (amazon prime video…competition for Netflix)!

 Liberty Braves has also pulled back over 10%.   Who does not want to own a baseball team?  Well unless you have a few hundred million this is the only way and there are not many franchises better than the Atlanta Braves.

The recent pullback could have something to do with getting knocked out of the playoffs and the loss of revenue that comes with that.

Google has fallen in share price and this looks like a good entry point.

 NETFLIX has a great recurring revenue stream and is still increasing subscribers.  Recently as high as $425 it currently sits at $325.  To me this is ‘throwing the baby out with the bath water’ as often happens in a correction.

 

Last but not least is WAYFAIR.  I suggested a buy on this stock when it pulled back last year to the $60 range.  It popped up and I sold.  The stock continued to climb but has recently pulled back to and entry level point.

Those who use the service (on line shopping with a focus on the home) may want to have some exposure.

 

The suggestions above will not be for everyone and only accounts over $250,000 may be able to participate in some of the suggestions.

If you want to find out if these suggestions may be applicable to you please reply to the e-mail.

The views expressed do not necessarily reflect the opinion of Argosy Securities Inc. The
information contained herein may not apply to all types of investors. Please consult a
professional before making an investment decision

 

Disclaimer:

The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Argosy nor its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents. This report is not, and is not to be construed as, an offer to sell or solicitation of an offer to buy any securities and/or commodity futures contracts. The securities mentioned in this report may not be suitable for all investors nor eligible for sale in some jurisdictions. This research and all the information, opinions, and conclusions contained in it are protected by copyright. This report may not be reproduced in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions, and conclusions contained in it be referred to without the prior express consent of Argosy.

 

‘historical analysis does not reflect future returns’

 

 

 

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