ETF Monkey October 2018

My Portfolio: Quick October Update

I recently offered a peek into my personal portfolio, as of the end of September, 20 18. Since that time, I provided a couple of quick action alerts; the first in which I added international bonds to my portfolio for the first time and the second regarding picking up a little more VWO based on continuing emerging market weakness.

October – A Brutal Month

I don’t think it comes as any surprise that October has been a very, very tough month for the markets. Let me hit you with some quick numbers for the U.S. averages as of today’s close, October 26.

Dow: Down 6.69% (From 26,458.31 to 24,688.31)

S&P 500: Down 8.76% (From 2,913.98 to 2,658.69)

Nasdaq: Down 10.93% (From 8,046.34 to 7,167.21)

In my September update, I quite honestly featured the fact that my portfolio had substantially underperformed the market. With a rather meager YTD gain of 3.08%, I trailed the Dow’s 7.04% and the S&P’s 8.99% by a rather substantial margin. And then you had the Nasdaq, up a ridiculous 16.56% on the year at that point.

A large part of the reason for this, however, was that I felt the market had gotten further and further ahead of itself, and had become more cautious as a result. In October, my caution paid off. Yes, my portfolio fell, but only to the tune of 3.89%. And I’m just a little further, 4.35% to be exact, from my all-time high of September 21, 2018. In comparison, the S&P is now down some 9.29% from its high close on September 20.

A drop roughly half that of the S&P 500? I’ll take it.

Taking Advantage

I haven’t sat by idly as all of this has been going on. I’ve taken advantage of significant weakness to add small positions in some quality ETFs and stocks. Here’s a quick summary:

ITOT – I’ve actually picked up small amounts on 5 separate occasions as October has progressed. That’s the sort of opportunity that  roughly a 9% drop in the U.S. market affords.

IEFA, IXUS, VEU, and VWO – Here are some quick comparative prices on these ETFs, comparing 10/26 to 9/28.

  • IEFA – $57.70 / $64.08.
  • IXUS – $54.43 / $60.31.
  • VEU – $47.00 / $52.05.
  • VWO – $37.41 / $41.00.

As can quickly be seen by eyeballing those numbers, foreign stocks have performed just as badly, if not slightly worse, than their U.S. counterparts.

VNQ – With the specter of rising interest rates continuing to play a huge part in the investing “conversation,” REITS continued their recent downward slide. As can be seeing in comparative 10/26 vs. 9/28 pricing for VNQ ( $77.20 / $80.68), it was not as bad as some other asset classes. Still, I decided to take advantage of a little weakness to add.

Next, here are the individual positions I have added to in October. I’ll start with 10/26 vs. 9/28 pricing and then offer a brief comment on each.

ABBV – $80.79 / $94.58. A slowdown in growth of Humira sales spooked the market, as well as a couple of other minor complications. However, at a P/E of roughly 10 and with a dividend yield of 4.75%, this one offers compelling value.

CVX – $111.53 / $122.28. Who knows? Perhaps it is falling crude prices due to Saudi Arabia reassuring markets of supply? As a reference point, though, CVX started 2018 at around $130 per share.

IBM – $124.79 / $151.21. IBM continues to have its struggles. The latest quarterly report underwhelmed investors. However, the recent price drop brings its dividend to over 5% as of today’s close, and the dividend doesn’t appear to be in danger.

MMM – $184.95 / $210.71 – Slightly slowing sales, trade war with China, yada yada. And a decline of over 10% since the start of the month. I’ll take some of that.

T – $29.09 / $33.58 – Sorta similar to IBM. A couple of concerns in the latest quarterly report. And then there’s that $190B debt load from the Time Warner acquisition. But a couple of recent analyses I’ve read agree that the 6.88% dividend (yep, you read that right – 6.88%) should be safe. Again, too good to pass up this chance to add a little income to the portfolio.

Final Thoughts

So there you have it. Down less than half the overall market, despite having an allocation to both U.S. and foreign stocks, I’ll take my October results. I still trail the averages YTD, but not by nearly as much as when the month started.

And that cash I raised? Hopefully, it’s led to the opportunity for some nice additions.

Take care, and see you next time!

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