Portfolio Update and Some Random Mavening

Over the past few weeks I wrote several pretty eloborate posts dealing with different issues ranging from risk management to defensive positioning. I decided not to publish them in my blog and instead just updated my portfolio and put a few random thoughts together. I amy still publish them at some point but for now, here is what I am focusing on.

September - I am concerned that media is putting too much focus on September being an ugly month. I examined some research that actually shows that there is no conclusive proof that Spetmeber has to be a selloff month. Over the past 12 years, 5 Septembers have booked gains and 7 had losses. Yes, losses were greater than gains, but one can't say every September will bring a loss. More importantly, if you look at it at on the quarterly basis, Q4 was positive 75% of time over the past 12 years. In case you want to start worrying about October - only 3 of the past 12 years, October booked a loss. But, again, if the media and every financial pundit on CNBC and Bloomberg continue to talk about it - we may get the proverbial sell fulfillment.

I am clearly defensively positioned in my real portfolio, with 50% of my trading and investing accounts being in cash. I was recently almost 70% invested. Taking some money off the table is not a bad idea. I want some dry powder and I know how I will use it.

It seems that every pullback I predicted happened, but the magnitude was never significant enough for me to go much more aggressive into equities. I still see some upside from here for major indices, but I see 950-1100 on the SPX as a difficult range to break out, barring major unforeseen shocks (positive or negative) to the economy. So my strategy reflects this though process.

If we do get a selloff to or near 950, I will continue to stay true to what works in this market and this economic cycle: mostly cyclical, such as energy, industrials, and select emerging markets exposure, mostly China and Brazil, with a few other emerging Asia markets.

My current defensive exposure is confirmed by three of the four MMMFs (Major Market Moving Factors) that I usually monitor. The Macroeconomic factor is currently neutral, given a progression of the better economic readings, but still volatility of these statistics can not be totally ignored. The Technicals, Fundamentals and the Sentiment factors have turned a bit more negative over past few weeks. This makes me cautious, but I am not ready to turn bearish.

My portflio is now fully updated as of September 3rd. You can see it by clicking on the "Maven's Portfolio" in my blog. Good Luck next week!