Surviving the Downdraft
By: Tim McPartland,
Todays market downdraft was no worse than we thought it would be – plenty bad, but not disasterous. Unfortunately, there is no resolution to any global issues and in fact with the Puerto Rico debt issue coming front and center we have a bit more to ponder. At least the Puerto Rican govenor was straightforward in saying that creditors should plan to come to the table for realistic talks and he left no doubt that Puerto Rico will be expecting concessions.
The situation in Greece is unsettling and now it looks likely it may be a week before we can start to resolve the issues—and then will they move toward resolution or just do more ‘kicking of the can’? We had believed that possibly this would be the start of a long term solution, but we now question whether that will be the case-at least yet.
So how did we survive today? Our Blended Income Portfolio took a knock of around .5 or .6%. Our SP500 hedge softened the blow by about .3%. The conservative Short/Medium Duration Portfolio lost a tiny amount (.10 to .15%) and performed as it was designed–as it has now for almost 8 months. Our personal accounts were about even today as they are set up similar to the Short/Medium Duration Portfolio, but as of last week we had added a SP500 hedge component.
Recall that we remain skeptical of REITs, upstream MLP’s, Utilities and perpetual preferreds and have minimum capital devoted to those sectors. From our perspective you should watch for special circumstances, but refrain from other purchases for the next number of days. Remember we also have employment data on Thursday of this week, which could also send markets through some gyrations.