At month end, the first of the tariffs took effect with the markets basically going sideways while trying to figure the impact. My impression is the first industry to be impacted (via retaliation) will be the lobster industry. Other industries will be later as the supply chains run off. Even the US dollar is taking the noise in stride resuming its’ ascent. Finally, the CCAR results were released with approval of the majority of the capital return plans of the banking sector (additional dividend growth on the horizon). Through this I generally stayed the course, the only exception being the implementation of a hedge on two mergers. June saw a rise in the S&P of 0.48% while my portfolio underperformed by registering a rise of 0.14%. YTD I still lag the S&P by 0.69%.
The theme for the month was volatility. A couple of ETNs cratered as a result of the high volatility causing investors to lose significantly when using these levered products. “We sincerely apologize for causing significant difficulties to investors,” Nomura said. Credit Suisse stated “investors who held shares of XIV had bet against at volatility at their own risk. It worked well for a long time until it didn’t, which is generally what happens in markets”. Caveat emptor.
During the month, the S&P index dipped into correction territory before rallying to close the month down 3.89%. My portfolio sympathized with the index closing down 5.53%. I never hit correction so my peak drop was less but I also failed to recover as quickly. Probably an area to perform a root cause analysis on at some point. Following back-to-back monthly losses against the S&P, I’m down 3.44% to start the year. Continue reading
With the wild ride in the markets this week, I perused some of the community’s blogs to gauge the reaction. While not meeting scientific norms regarding sample size, I was surprised by the lack of reference to the pullback in 66% of them – including ones with posts as recent as yesterday. Perhaps it’s a lack of funds to take advantage or the deer in the headlights syndrome. One blog, Fully Franked Finance, had a timely piece a few days prior which stated the importance of a ‘shopping list’ – as many others also encourage. I too, engage in a strategy which emulates the ‘shopping list’ strategy. So, what were my moves so far this month?