Oooh, Mr. Market isn't feeling too good.
I have been regularly getting the question of what are we doing at CWM in this market. I am sending this out to simply update some of you who have interest or connections with Bob & I, our firm and/or clients. There is no doubt, one of the great challenges currently is finding strong risk/return opportunities to place money. Raising cash in hopes of getting back in the market just does not seem like a viable plan, yet cash is very expensive considering it pays nothing. We are feverishly researching, meeting and structuring ideas for our clients.
On Wednesday of last week we began to “throw weight overboard” that we felt was going to make a potential storm more difficult to handle. That included primarily a 50% reduction in Technology and an effort to eliminate any Financial Sector overweight. While we would have loved to have gotten out of more and thought some of the prices were not ideal as the week came to an end, it now looks like a decent move to lighten up. We will want to get back into some of those positions in the future.
Technology because it is primarily non-dividend paying companies, which historically have had much greater downside capture should we hit a tough patch (like today!). Financial weighting was substantially reduced on the concern for of the European impact that is manifesting itself today and the belief that the housing market will continue to weaken and put pressure on any sub-prime that is not correctly priced on balance sheets. It would have been nice and frankly brilliant to have sold out of everything, but that would be the move of a trader, not an investor. We have compiled a “bucket list” of stocks, ETFs and commodities that we would like to pick up as the market tries to find its legs. The market feels tired and buyers are reluctant to jump in. That said, the world is not coming to an end, it is just very sore from efforts to get back in shape after so many years of not paying close attention to its fiscal health.
On Wednesday of last week we began to “throw weight overboard” that we felt was going to make a potential storm more difficult to handle. That included primarily a 50% reduction in Technology and an effort to eliminate any Financial Sector overweight. While we would have loved to have gotten out of more and thought some of the prices were not ideal as the week came to an end, it now looks like a decent move to lighten up. We will want to get back into some of those positions in the future.
Technology because it is primarily non-dividend paying companies, which historically have had much greater downside capture should we hit a tough patch (like today!). Financial weighting was substantially reduced on the concern for of the European impact that is manifesting itself today and the belief that the housing market will continue to weaken and put pressure on any sub-prime that is not correctly priced on balance sheets. It would have been nice and frankly brilliant to have sold out of everything, but that would be the move of a trader, not an investor. We have compiled a “bucket list” of stocks, ETFs and commodities that we would like to pick up as the market tries to find its legs. The market feels tired and buyers are reluctant to jump in. That said, the world is not coming to an end, it is just very sore from efforts to get back in shape after so many years of not paying close attention to its fiscal health.
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