Time to Reduce Exposure to American Stocks?

I told my U.S.-based family members to raise between 10% and 20% cash in any and all stock/investment accounts. I personally wouldn't mind if my sister and brother-in-law increased their cash/money market holdings to 30%, but they are young, and their youth makes it hard to suggest a more conservative allocation. (It doesn't help that bonds paying interest in U.S. dollars seem to be fairly valued.) My parents, who don't generally listen to me, told me they're already all in cash. 

I am still holding onto my General Electric (GE) shares, along with various REIT and other preferred shares, but I do not see much value in U.S. equities markets as of April 2, 2019. 

Shiller P/E is one useful metric to consider for overall valuation.

I suppose Kraft Heinz Co. (KHC), which I recently bought, looks cheap, but its debt load is considerable, and I don't have many shares of it. I like a few other individual U.S. stocks besides GE, but I allocated a considerable amount of my holdings to GE at an average of approximately $12.50/share, and I'll wait for a turnaround. I do hold a few international companies, but none I like enough to suggest publicly. If you're reading this post, good luck, and do your own due diligence. I am not an oracle of anywhere when it comes to investing. 

Disclaimer: The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result. I am not responsible for any harm arising from following anything construed as advice herein. 

Miscellany

1. S&P 500 closed on 2867 on April 2, 2019, the date of this post. 

2. GE stock is around 9.26/share mid-day April 8, 2019. 

3. KHC is around 33.22/share mid-day April 8, 2019. 

Update on November 7, 2019 

1. S&P 500 closed on 3076 on November 6, 2019. 

2. GE stock closed at 11.02 on November 6, 2019. As far as I know, I have sold all my individual shares, but my positions may change at any time. 

3. KHC closed at 33.14/share on November 6, 2019.

As of November 7, 2019, I have a conservative portfolio, but my positions may change at any time. 

Update on February 1, 2020

The recent correction has caused me to deploy some of my cash. I have bought shares of XOM, CVX, PSX, GT, MUR, and various REITs. My positions may change at any time. You are responsible for your due diligence. 

Update on April 28, 2020

Markets declined substantially in 2020 because of the COVID19 pandemic, hitting a recent low on March 23, 2020 but have since retraced most of their losses. Though indices declined between 10 and 20%, REITs and oil companies declined around 40 to 50%--and have yet to fully recover. I continue to hold banks and oil companies, which are still paying dividends. Facebook's Libra digital currency has not made much progress, indicating USA banks are still strong as long as they co-opt or harness blockchain technology. I have not had General Electric (GE) stock for a while now. As always, my positions may change at any time. You are responsible for your due diligence. 

Update on March 24, 2021

GE stock closed at 12.50/share today. I did not benefit from the full recovery because I sold most or all of my GE shares a while ago. 

KHC closed at 38.23/share today. As with GE, I did not benefit from the full recovery because I sold most or all of the shares a while ago.

The S&P 500 closed at 3892 today. 

American indices have hit all-time highs or close to all-time highs. I have raised considerable cash, but my positions may change at any time. You are responsible for your due diligence.  

Update on Stock Market

On January 20, 2010, prior to the market opening, I indicated the stock market would decline to around 1000. See HERE. From January 19 to February 5, the S&P declined from 1,150.23 to 1066.19--a drop of 7.3%. I recently dipped my toe in the market, buying dividend-paying stocks, but now I'm not sure if the S&P will decline to 1000. If the market continues to decline to 1000 or 900, I will double down. I kept some gunpowder for another shot, which makes me feel better if the market does in fact decline to 1000 or less.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

How Did My X-Mas Shopping Go?

On December 18, 2008, I posted my personal X-Mas shopping list for stocks. Although I intended to hold the stocks for at least a year, I made some changes, taking some losses to raise cash and to buy Berkshire Hathaway (BRK.B). Let's review:

12/18/08

CSCO = 16.66
EWZ = 35.95
INTC = 14.26
KO = 45.18
MXIM = 12.00
WFC = 29.65

S&P 500 = 885.28
DJIA = 8,604.99
Nasdaq = 1,552.37

3/26/09

CSCO = 17.31 (+3.9%)
EWZ = 40.85 (+1.3%)
INTC = 15.82 (+10.9%)
KO = 44.85 (-0.7%)
MXIM = 14.11 (+17.58%)
WFC = 15.95 (-46.2%)

S&P 500 = 832.86 (negative 5.9%)
DJIA = 7924.56
Nasdaq = 1587.00

Overall, the return on the above portfolio is a negative 2.2% (not including dividends). This return beats the S&P 500, but my victory is admittedly Pyrrhic. If I had avoided Wells Fargo, I would be doing quite well. In fact, I bought Wells Fargo stock all the way down to 9 dollars and recently sold at around 14 dollars, taking a loss. I just sold Intel and Maxim, too, but plan on buying them back at lower prices. The recent run-up seems too much, too soon. Even so, my major holdings, all in mutual funds, are untouched and mostly in stocks.

I am worried about the T. Rowe Price Latin America mutual fund (PRLAX) and iShares MSCI Brazil Index (EWZ). Despite its name, the T. Rowe Price Latin America fund holds Brazilian stocks. I am concerned because Brazilian government projections seem overly optimistic; demand for commodities continues to be soft; and political rivals appear all-too-willing to undermine President Luiz Silva's authority.

Right now, the above list is not representative of my major holdings. I continue to trade actively in my retirement accounts.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

Update on 3/27/09: an astute seekingalpha.com reader points out that my math above is incorrect (and in my favor):

"You need to check your math. On EWZ, a price move from $35.95 to $40.85 is 13.63%, not 1.3%."

That, my friends, is why I'm a lawyer. I leave the math to the professionals and the expert witnesses.

An X-Mas Shopping List

For those of you looking to tip-toe back into the market, looking at money flows is one way of seeing what others are buying. On December 18, 2008, it appeared investors were buying the following companies: Cisco (CSCO); Intel (INTC); Coca-Cola (KO); and Wells Fargo (WFC). Investors might also consider adding a Brazilian ETF (EWZ) and an undervalued technology company, Maxim Integrated Products (MXIM), to the above list.

The dollar's recent decline favors American companies that receive a substantial portion of their revenues abroad. Although one of my colleagues thinks Coca-Cola is sugar water and refuses to buy the stock, Coke has a decent dividend; good cash flow; and worldwide appeal. Even if a large percentage of the entire world becomes unemployed, they still have to drink something, and coffee--especially at 4 dollars a cup--is losing its status as the drink-du-jour. I also find it unlikely that people will cut back on soda, because soda is still cheaper than most other drinks.

Cisco is poised to rebound as an infrastructure play, especially if it gains ground in China and other Asian countries. Cisco has taken various actions--which include providing support after the Sichuan Province earthquake--to convince the Chinese government it wants to be a technology leader in China.

Wells Fargo represents a risky contrarian play. When the real estate market recovers--which it will, at some point--Wells Fargo will benefit. If it maintains its dividend, investors will receive around 4% while they wait, a better rate than most CDs. I considered replacing Wells Fargo with an REIT, but I used to own REITs primarily for their dividends. At this time, Wells Fargo's dividend is high enough for me to prefer its diversified business over a REIT. I also like the fact that Warren Buffett owns Wells Fargo shares.

EWZ is a Brazilian ETF. I've included it here primarily for diversification purposes, especially in the energy/commodities sector. Some investors may prefer to buy ConocoPhillips (COP), another Buffett pick, instead.

Intel (INTC) was downgraded by Jefferies and Co. today. (Interestingly, Jefferies (JEF) itself is being sold short by Barry Ritholtz, who accurately predicted the most recent market downturn.) With a 3.6% dividend yield, a dominant market position, and around $10 billion of net cash, it's hard to see Intel stock remaining at current levels. Although the U.S. market is saturated, Asian consumers will be buying more computers, and businesses worldwide will be buying more servers--products which generally require or use Intel CPUs, due to Intel's quasi-monopoly position in the processor market.

Intel's real problem is that lower-end laptops have become so cheap, they retail for about the same price as a Blackberry, iPhone, Google Android phone, and Sony Playstation. As a result, if consumers choose to delay upgrading their laptops and instead buy an iPhone or a video game console, Intel's revenue will suffer.

Maxim Integrated Products (MXIM) has no debt and finally appears to have its financial house in order, having resolved stock option backdating issues. Now that its external issues have been resolved, Maxim should do well as more consumers worldwide buy products using Maxim's analog chips. Maxim sports a 6% dividend yield.

A caveat: I don't work on Wall Street; I'm not in the business of making stock recommendations; and I don't have any financial licenses or formal financial training. Do your own due diligence before buying shares of any company. Although I currently own shares in all the companies mentioned above, I may sell all my shares in the future. Current conditions are volatile and favor short-term traders.

Disclosure: I own shares in all of the companies mentioned above. My relatives also have other financial interests, including shares, in Maxim Integrated Products (MXIM). You can read about Maxim's recent shareholder meeting here.

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

I plan on revisiting these stocks a year and two years from now. Prices at the close of business on 12/18/2008:

CSCO = 16.66
EWZ = 35.95
INTC = 14.26
KO = 45.18
MXIM = 12.00
WFC = 29.65

S&P 500 = 885.28
DJIA = 8,604.99
Nasdaq = 1,552.37

Update on December 23, 2008: a JP Morgan analyst disagrees with my assessment of MXIM. We will see in December 2009 who was right about MXIM. Almost all these these analyst downgrades come after the bad news has already been released. Consequently, when a major firm issues a "sell" or "underweight" rating, that's when contrarians and value investors should take a closer look at a stock.

Now a Good Time to Invest?

A lot of you have been on the sidelines, waiting for a good time to buy stocks. I'm not making any recommendations, but I just bought between 55 to 250 shares of some tech stocks, including NVDA, ERTS, INTC, STM, SYMC, and CSCO. I realize my financial outlay isn't much, but perhaps these shares will be worth much more five years or more from now.

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.