WASHINGTON, November 5, 2012 – Yet another relatively short column today. The markets continue to meander this morning with a moderately negative tone. They’re marking time, clearly, dreading and/or anticipating Tuesday’s election results here, but also keeping an eye out for Wednesday’s elections (again) in Greece.
The latter event is flying below the radar screen. But, if voting results there coincide with something like a repeat Y2K election situation here…well, we hope you’ve already dug out that fallout shelter and have stocked it amply with canned goods. Lefties here have been threatening to riot if The One is not re-anointed for four more years “Forward” on Wednesday morning. Problem is, the other side has been doing plenty of business with Smith & Wesson, et. al., (we’re not kidding) and is likely to take any such threats seriously.
Regarding the election, we hope that the nutcases on both sides of the aisle allow common sense to prevail, whatever the outcome, but you never know. Given this kind of background, though, investors have been getting pretty cash-y for the last few sessions really, false rallies notwithstanding. One of our investment advisory services has actually gone as high as 70% cash. We’re not that high, but are approaching 50% cash in our major portfolios.
We sold our gold ETF this morning (IAU) with some regret, but the charts are looking lousy all around. With our Schwab IPO calendar rounding 31 days after the disaster, we unloaded our shares in LifeLock (LOCK) as well.
LOCK turned out to be a mini-Facebook for us, losing close to 20% of its value within a week or so of the early October offer, priced below expectations at 9. As the stock bottomed, we piled into 400 shares at a lower price to lower our aggregate entry cost. This morning, after the stock spent the last two days clawing a bit higher, we sold for a combined loss of about $200. Not bad, considering, and that second batch of stock, by going green, minimized the loss we’d otherwise have to have taken.
Hey, we can be geniuses, which is why we offer this column to you. But sometimes, we screw up like everybody else, and there’s no point fibbing about it.
We’ve retained our short yen ETF, YCS (incorrectly identified in an earlier piece as a Chinese yuan ETF), although it’s off rather smartly this morning as the dollar seems to be popular today as a hedge against a possible Greek electoral fiasco.
We’ve been picking into anemic but high yielding utilities like FirstEnergy (FE) and American Electric Power (AEP) and will probably average down if the market continues to sink. Both are based in the Rust Belt, specifically Ohio, and FE, via acquisition, is heavily into the PA and NJ markets that got pummeled last week by Hurricane Sandy which will lead to significant repair bills—this on top of a possibly too-gloomy recent outlook by the company during its most recent quarterly conference call.
Both utilities are also pretty coal-heavy, although they’re cutting back, thanks to the EPA’s current vendetta against our abundant coal mining/utility industry. That said, this could make them a nice boomerang play if Mitt Romney comes out on top either Wednesday morning or sometime in December when all the lawyers have cleared out. If the Mittster loses, oh, well, we’ll always have those dividends—4-ish%—which will serve to make us happy while we get back (hopefully) to break even.
We’re looking to pick back into our REITs as well. They’ve bounced back from their recent selloff and we’d like to get back in before the next dividends get declared. So far, we’ve picked up one of the lesser-known REITs, Armour Residential (ARR, a symbol that reminds us of “Talk Like a Pirate Day). ARR sports a current yield of 15.13% which looks pretty secure, at least for now, just like our utilities above. We’d also love to get back into IVR and AGNC, also high-yielding and stable. But there’s no rush, given this week’s incredible uncertainty.
Aside from the above, we’re content to wallow in a bit of cash and pretend it will grow in 2013. Nobody knows at this point. Facts are hard to come by. All the polls are skewed. The political journalists and columnists are spinning like whirling dervishes. The CNBC types continue to tout their books to the unwary. The HFTs and algos continue to destroy what’s left of the investible markets. Congress and the EU continue to kick their budgetary cans down the road, further guaranteeing abject poverty for the millennials. And in general, amorality and illogic reign supreme.
That’s hardly an environment for a confident investor, unless he or she happens to be keeping most of his/her money in the First National Mattress Bank. So why don’t we do the same, at least through tomorrow. If we can get some definitive results by Wednesday morning, we might finally get a clue as to whether it’s best to go all in to this market, short the living daylights out of it, or take all our money, canned food, and ammo and head for some remote, fortified bunker out there, somewhere.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate. He sold his positions in IAU and LOCK this morning while adding to positions in FE and AEP.
Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.
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