Author: Leif Eriksen
Covestor model: Performance with Protection
Disclosure: Long TOT, ESV, CSCO, ITW, TEF
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair…” Charles Dickens, A Tale of Two Cities
Dickens might very well have been talking about the times we live in and the financial markets that oscillate daily between optimism and despair. Although the bulls have been on a run for two years now, the bears never seem far away.
My response to the turmoil has been to tweak my portfolio to capitalize on the volatility. I’ve increased my oil and gas exposure by adding TOT and ESV. I’ve added to my CSCO position following the market’s overreaction to CSCO’s recent quarterly report. And I’ve added a new position – ITW – based on its exposure to economic expansion and developing markets.
On a more minor note, I’ve replaced VZ with TEF, based on the latter’s more attractive valuation and exposure to global growth. Finally, I sold DEO to focus on more attractive opportunities.
The events in the Middle East (and their effect on oil prices) will continue to roil the markets until there’s some resolution, which might be for some time. They remind us that progress is not characterized by a steady march onward and upward. However, it will come and with it will come economic growth. And that’s why I continue to be invested in the common stock of companies that will benefit from that growth – however and whenever that may come.
Until next month, many happy returns.
