Friday, February 6, 2015

Soos Global Investor Update (Friday, Feb. 6, 2015)

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With today’s stronger than expected NFP report, I sold out of our positions in short-term bond ETFs.  I had been holding them for a while in a ‘holding pattern’ with the goal of earning some yield above cash, with the idea that as soon as there would be a catalyst to add to the Fed’s reasons to hike sooner rather than later, I’d exit.  Today’s NFP report, I believe, qualifies as one such catalyst.  Despite a mix of data in recent weeks, this number, both stronger than expected for Jan, and revised up in Dec and Nov, is certainly going to be a major talking point at the Fed’s next meeting.  The wage growth in particular.
To be clear, I do not expect the Fed to hike aggressively.  I still think that the ‘hiking assignment’ that the Fed will have will be limited to a relatively small, very deliberate, measured increase in short term rates.  But in that environment, I’d expect money to move out of short-term ETFs into longer term fixed income where the risks of inflation still seem pretty remote and where global growth is moderate at best.
With equities at or near all time highs, and with earnings outlooks less than euphoric, I’m still allocating a portion of the portfolio to ‘high dividend/fixed income’, seemingly defensive plays.  In that context, I’m holding longer term bond ETFs, preferred ETFs, REITs and utilities.
Will look to reinvest the cash into other ‘holding pattern’ fixed income or preferreds, or directly into stocks when opportunities appear.
Separately, in recent days, I took profits on Pfizer (PFE) and bought an initial position in Symantec (SYMC) which I’d like to build on in addition to other cyber-security plays.
Will keep you posted.

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
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Additional Disclaimer: currently long many stocks/ETFs incl LQD, CHI, PFF, PFXF, SYMC.  Positions may change at any time without notice.