March was a quiet month for the Aspect Large Cap Value Investment portfolio. Just about the only thing I did was add Verizon (NYSE: VZ) to the portfolio.
I personally feel that the market is not expensive enough to sell more, and not cheap enough to buy too much. Still, Verizon was too good to pass up, so we used some of our large cash position to buy shares.
Other than certain marijuana stocks, which we do not own, the market seemed to churn. Despite the old saying “never short a sideways market,” I don’t see any reason to increase the fund’s exposure to equities at this time.
The reason I bought Verizon is because an interesting opportunity was created when the company bought out the remaining stake in Verizon Wireless from Vodafone (which we used to own).
The deal included Verizon stock for Vodafone shareholders. Typically, in this situation, the shares of the acquiring company (Verizon) become artificially depressed, since Vodafone shareholders get small amounts of a stock they have no interest in and sell it on the open market. This is often a temporary effect.
So assuming that the Verizon Wireless purchase was a good idea (and I believe it is) and that it will be accretive or additive to earnings (which I believe it will be).
I have no way for knowing for sure, but I believe that Verizon stock should slowly trade back up to the old highs, and combined with Verizon’s generous dividend, that represents a good investment in my opinion.
In summary, I do not believe that this bull market is over, but as witnessed by the recent surge in IPOs and the lack of stocks to buy (although by definition I still believe that the stocks in our portfolio are undervalued), I find myself doing a lot less.
Our heavy dividend component, and hopefully a rotation into large cap value and growth stocks should help the portfolio. If I had to guess, the market will end the year with the S&P 500 Index (SPX) around 2000, but it will be a wild ride.
As long as Fed chief Janet Yellen keeps her foot on the gas, we have a backstop in this market. Yellen believes in a weak dollar, and so the Fed will continue to print money in my opinion.
DISCLAIMER: The investments discussed are held in client accounts as of March 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
