A Sea of Change

There are events that present opportunities through chaos and the US election – as Brexit was – appears to be one.   During these times as the sands are shifting I find it prudent to attempt to handicap the situation identifying strengths and weaknesses primarily using my portfolio as a lens.  Many questions currently have no answers and some stock gains appear to be based on assumptions more than facts.  I do reserve the right to modify my thoughts as more data is obtained.

REITs have generally taken a beating primarily on interest rate fears.  but the same could be said for Telecoms and Utilities.  Telecoms appear to have been spared due to M&A activity.

Financials appear to be a tale of diverging paths.  Pundits are bullish on the big banks but not so much on the little guys.  My guess is M&A will slow among the small banks as Dodd-Frank is tweaked but will accelerate as the reality of profitability through synergy is identified.  Multinational banks will continue to have to deal with Basel III to remain competitive globally tempering some of potential gains.

Healthcare is a wildcard.  To repeal a dysfunctional new scheme to implement an old dysfunctional scheme without morphing it into a newly dysfunctional scheme is ludicrous and where this sector’s profits will be found (until Congress gets wise).

Discretionary will depend on the economy – is the new plan recessionary?

And Mexico?  Strangely silent have been F, UTX, KO, DE and a host of others with operations there.  Then there is the NAFTA treaty which requires Senate action to modify.  It’s difficult to see many California or Texas senators supporting an action that would raise unemployment and reduce tax receipts by shuttering logistics centers.

Basically I see no immediate strategic portfolio change but additional diligence will be required.  A possible watch list might include UMBF, WBS and ONB for exposure to Health Spending Accounts (HSAs); KSU (Mexican trade); and KOF.  Other then the peso valuation and the ADR trade, I know of no other US exposure for KOF (Coca-Cola Femsa).

And how are you surviving?

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4 thoughts on “A Sea of Change

  1. My account is >60% banks stocks (I’m looking to reduce by the way), so it shot up way high. And looking for another positive day. I was waiting for a market drop which didn’t happen.

    Oh well, I’m wait for F to get a little bit lower so I can buy more to reduce cost per share.

    I’m not a coke person as I don’t believe in their product. Their beverage is killing Americans. I’ll have to look into utx an other companies exposed to Mexico and see if I can capture the buying opportunity.

    One thing though, if yellen increase rate too fast, the market will go way down, and banks shall come down with the market.,

    Liked by 1 person

  2. Since I’m about 25% banks, me too. I’m not big on Coke but find their bottlers interesting. One thing to consider … with a Trump spending spree, she may have to raise to stay ahead of inflation, which will increase the carrying costs of the debt. Good luck on F.

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  3. It has been really interesting to see in my personal capital account a quick snap shot of the winners and losers for the day. I think that traditional energy stocks will continue to do well while green energy stocks will continue to take a beating under the Trump administration.

    Liked by 1 person

  4. I suspect you’re right – NSC and CSX are both up in anticipation of coal shipments increasing. The biggest potential disruption that I see to Trump’s energy plans are the Cushing area earthquakes (pipeline hub and storage). My biggest surprise has been the strength of this rally. I may need to buy some more UK, select Canadian and Australian stocks to take advantage of the stronger US dollar. 🙂

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