WASHINGTON, January 17, 2017 – If you’ve read our companion column today, you’ll already know that markets are getting totally confused by all the fake, speculative “news” being put out this week by MSM outlets geared toward making the new Trump Administration’s traditional presidential “honeymoon” period last about as long as it take The Donald to recite the oath of office and no longer.
In addition, the crybaby but always violent left threatens destructive mayhem in DC this week to make matters even worse. These clowns live in an evil, parallel universe. Yet we can still look forward to seeing far more network news reports on their threatening, histrionic antics than we will of Trump and his more serious entourage. It’s how the narrative gets shaped. And so far, neither the humiliated MSM nor the disgraced pollsters have learned a thing.
This likely chaos, in turn, will make for a wobbly trading week for investors and institutions alike. For that reason, we will likely have little that’s constructive to offer our readers this week, save for investing administrivia that we hope may be of some value. Otherwise, it’s going to feel like we’re all waiting for Godot.
Hopefully, things will return to relative normalcy once the horde of Soros-paid leftist demonstrators do their best to hog the cameras, trash stores and businesses and assault anyone in Washington, D.C. who even looks like a Trump supporter.
Until the smoke clears (and yes, there could be smoke), we’ll keep things brief here unless we have some real news to report and act upon.
It’s likely going to be a week for housekeeping in our investment accounts here. “Housekeeping” for the Prudent Man generally involves building initially tiny positions (1-5 shares) in various ETFs that are likely to get a boost at least this week or next. If the price of these ETFs goes down over, say, 2-3 percent, then we generally pick up more shares. On the other hand, we rarely chase them up when they start moving the way we want them to.
This tactic tends to result in short, usually (but not always) profitable small trades that regularly add to the tally of gains we always hope to get.
Current ETFs in our portfolio live mostly in ETFs we can trade without commission, something that makes this trading tactic worthwhile. Commission-free trading of select ETFs, BTW, is becoming more common. However, the selection of “free” ETFs you can trade will vary depending on where you keep your own accounts.
Currently, we’ve been favoring our brokerage’s ETFs in large-cap growth stocks and in U.S. “TIPS” bonds, which provide a variable interest rate—a likely long-term hold, given that at least for now, interest rates should be going up slowly, causing our own interest rate-based returns to increase as well. Theoretically, at least.
We also like out-of-favor ETFs in consumer staples like the equal weight sector ETF offered by Guggenheim, symbol RHS. Ditto Guggenheim’s S&P 500 Equal Weight Index ETF, RSP; and Guggenheim’s Equal Weight ETFs in healthcare (RYH) and tech (RYT).
In addition, we’re looking to make a bit of a longer-term commitment in a highly reliable agribusiness ETF, the VanEck Vectors Agribusiness ETF whose wonderfully apt trading symbol is MOO. It’s been looking good lately, but has been getting a little haircut today, so maybe we’ll buy some. This one, however, is not a commission-free trade (at least for us), so we’ll want to feel as if it’s bottomed out before we make the commitment.
Right now, this is about it. This trading week, it’s going to be hard to avoid investing landmines, particularly ones that involve “headline risk,” as in the President-elect’s diatribe against drug manufacturers or the AARP’s publication this week attempting to scare old people (like the Prudent Man) into resisting any Republican efforts to “cripple” Medicare.
In other words, it’s better that we wait until the smoke clears on stocks that do business in the healthcare arena, and, perhaps, in the military procurement sector as well. We’ll keep you posted on any relevant developments here. Or at least the ones we can see.