The broader US markets (SPY) swooned again January 7 as fears of a slowdown in China (FXI), or worse, a dislocation in Asia’s currency markets, and ongoing concerns about the sustainability of some of the most leveraged “players” in the energy complex took the spotlight again.
None of this should be surprising.
As we’ve done many a time before with the mortgage REITs, namely American Capital (AGNC) and Annaly (NLY), SeaDrill (SDRL) and the latest with Kinder Morgan (KMI), our members are far ahead of developments. That’s our job – we’re not reporters. We strive to get the right information to our members before it becomes “information,” and using the newsletter portfolios as an indication of our views on capital allocation and broader equity market direction is par for the course.
As one might expect, both newsletter portfolios have north of 30% cash positions, and we expect both to continue to outdistance their respective benchmarks in light of the recent US equity market fallout. The Dow Jones Industrial Average (DIA) tumbled more than 390 points January 7, adding to one of the worst starts to any year. As January goes, so goes the year, the old saying goes. We don’t buy into “silly” sayings such as these, but the reality is that a further slide in the broader markets isn’t out of the question – from our view, it is quite probable.
If you’ve followed any of what we’ve done thus far, even without the alerts on Alibaba (BABA) and Rio Tinto (RIO), the initial capital allocation of the newsletter portfolios alone has put members far ahead of the crowd. Some onlookers may want us to “buy, buy, buy” in the face of a swooning equity market, but this is ludicrous – absolutely ridiculous! From my perspective, I’d rather lose all of our subscribers than all of our subscribers’ money by serving up idea after idea. I say what I really think, and you’ll never hear “perma-bull” propaganda to keep you paying those membership fees.
Of course we get abused by some due to our honesty, but our integrity is worth far more than a few bucks we would get to keep churning new idea after new idea. Seriously, we’re currently near all-time highs in the broader US markets, which have tripled since the March 2009 panic bottom. A little prudence is in order…would you say? Other newsletter writers and free research services may keep you fully exposed until you go bust. Maybe you’ve recently heard: “Stay in the market – or you might miss out?” Have you bought into this?
We’re exercising prudence and patience and not jumping head-first into adding new ideas near the “top of the market.” We’re not a content farm delivering “propaganda;” we’re here to deliver the best research and analysis, to achieve the goals of the newsletter portfolios, and to serve our members the best way we can. In case you missed it, Energy Transfer Equity (ETE) notched a fresh multi-year low at $10.56 per share January 7, and we still don’t like it. We care. Please don’t lose tens of thousands of dollars just to save a few bucks a month in membership dues. It just doesn’t make sense.
Patience. We’ll be loading up on new ideas soon, but we’re letting the market tell us when it’s time…