WASHINGTON, July 6, 2017 – Very short column today. As we indicated in our companion column, the moral, cultural, political, legal and economic vibes this summer have caused traders who were very enthusiastic at the beginning of 2017 to pull back. This is leading us into another bout with “Waiting for Godot” syndrome on Wall Street.
As we write this around 1 p.m. ET on Thursday, major market averages are collectively down about 0.5 percent thus far and don’t look like they’re ready to give us a surprise rally. (We think.) It looks like the summer doldrums have set in today. Big time.
Our portfolios bob up and down, up one day, down the next, having left us essentially flat though slightly positive in June. July looks like it could be more of the same. A big part of the problem is a lack of convincing information on stocks and the economy in general. To paraphrase Porgy’s famous song from Gershwin’s “Porgy and Bess,” “We got plenty o’ nothing.” The philosophical Porgy was okay with that, but as for us, not so much.
Such boring churning action isn’t uncommon during the summer Wall Street doldrums, given that some of the big money is always out in the Hamptons enjoying its ill-gotten gains and laying off the compulsive trading for a week or three. Which means you never know when you’ll get a big, exciting rally, which, unfortunately, often gets followed by a big, heartbreaking crash.
It’s kind of boring, actually.
But we do continue with our light portfolio housekeeping chores. We’ve pared positions a bit here and there, while we continue to add to key ETF positions on dips.
For example, we’re slowly climbing back into a pair of Guggenheim equal weight ETFs in healthcare (RYH) and tech (RYT). Healthcare remains robust, but it’s off right now, and we prefer to buy on negative days in this sector. Ditto tech, which, as we noted in our other column has been stinking up the joint lately, but which generally takes off in the fall. So why not pick some of these ETF shares up right now while they’re getting cheap and maybe cheaper?
Having sold our position in Apple (symbol: AAPL) last month for a modest profit, we’re looking to climb back into the stock again once it looks like it’s bottoming out, which might just occur around the last price we bought most of our shares at, circa $140 per share.
Continuing in the tech arena, we’re currently in a pair of chip stocks, one of which, ON Semiconductor (ON) has not been kind to us, though we doubled up on it Wednesday; the other, a recent acquisition, is Micron Technology (MU), a once beleaguered chipmaker that’s lately been on the move.
After reporting great quarterly numbers last Friday, Micron shares were pancaked by a mass investor exit. It was a ridiculous reaction. But it was perhaps more understandable for tech share holders who, like they do every summer, are convinced the world is at an end. The selloff was so stupid and so extreme that we jumped in and may buy more if the stock stays weak a bit longer.
On a gut level, we actually don’t like techs in general precisely because of this kind of emotional volatility. As a result, we’ve never gotten into this sector in a big way, meaning our annual investment results, while usually better than average, haven’t been earth-shattering either, since techs are really where you can make (or lose) the big money. It’s been that way for years.
But we hate volatility, so we’ve mostly avoided this sector and have paid a penalty for it. This finally led us to conclude we needed to be in tech at least a little bit to improve our returns.
Although it’s not our intent to give investment advice in our columns, we’d make the following observation: If you’re the kind of super-conservative investor who wants to sleep soundly every evening – particularly if you’re an old-timer like yours truly – you may not want to load up your portfolio with tech goodies, unless you have ample supplies of Maalox and melatonin at hand.
We probably won’t file a column tomorrow as we’re off covering opening weekend of the Contemporary American Theater Festival in Shepherdstown, WV, and we won’t have good connectivity where we’re staying, some 30 miles west of that picturesque town on the Potomac River.
So, in the meantime, have a great weekend, and we’ll likely see you again on Monday.