Let’s be clear. I don’t have any idea of when the current selling in technology and high-valuation growth momentum stocks will end. It does seem likely to me, even after the March 9 bounce, that the rotation into cyclicals, vaccine recovery stocks, and value stocks will continue for a while.
From that perspective, I’m glad that I added Invesco KBWB Bank ETF (KBWB), Vulcan Materials (VMC), Caterpillar (CAT), MGM Resorts International (MGM) and Coca Cola (KO) to my Jubak Picks Portfolio since the middle of February. And that I added Dow (DOW) and Citigroup (C) to my Dividend Portfolio in Mid-December. (All those picks are in the black since my purchase date. You can check the online portfolios to see by how much.)
But now that the NASDAQ Composite has dropped into an official correction–down 10% from its February 12 high–I’d like to be holding some more cash in case I can get a bargain or two from the technology and momentum growth stock sell off. (Of course, holding a little more cash isn’t a bad insurance policy in a sliding market either.)
So tomorrow I’ll be selling the Invesco Currency Shares Japanese Yen (FXY) out of my Volatility Portfolio on JubakAA.com and JugglingWithnives.com. That sell isn’t because this yen ETF is especially risky right now–it’s down 4.81% year to date after gaining 4.61% in 2020–because it’s not. But I added it to this portfolio on the potential to pick up some gains against the dollar–and to stash some cash out of harms way until I could see better opportunities in the market. I don’t see those better opportunities yet but I think they’re coming and I’d like some more cash with that in mind.
I’m also selling shares of JD.com (JD) out of the Volatility Portfolio tomorrow as well. This position is up 36.47% since I added it to the portfolio back on July 15, 2020. JD is a high volatility stock that in the short term moves with market sentiment on risk (rather than with prospects for the Chinese economy, which look rather positive at the moment.) I wouldn’t mind rebuying these shares $20 or so lower but I’m also going to be on the look out for any better potential bargains.
And finally, I’m selling the Vanguard Intermediate Term Treasury ETF (VGIT) out of my Jubak Picks Portfolio. This ETF did just fine in 2020 with a gain of 7.71% but now that Treasury yields are climbing, although most noticeably so far at the longer end of the yield curve, this ETF is going to struggle. For 2021 to data as of March 8, it’s down 2.34%. I’d rather be sitting in cash right now than in an intermediate term Treasury fund. And I’d like to have the flexibility to deploy cash quickly if 2021 brings me an opportunity or two. This position is up 2.87 since June 3, 2019.
And speaking of potential bargains. I’m going to set up the trusty Dip-O-Meter tonight on my JubakAM.com subscription site to track opportunities as they develop.