October was a very volatile month for the Aspect Large Capital portfolio. The market declines hurt the strategy, but also provided me with an opportunity to put my cash position to work.
What was most surprising was the swiftness of the decline and the subsequent rise. The market waters were definitely crashing against the rocks in the first half of the month.
Though I consider myself to be a long-term investor, I had one position that I decided to sell within the same month of purchase.
That position was Outerwall (OUTR) and I decided to sell the stock without holding it long term.
Oil prices have been decimated as of late, hitting the share price of drillers such as Transocean.
However, in my opinion, low commodity prices tend to be self correcting.
If prices decline to a point where it is not as profitable to produce the commodity, production will be cut back. That in turns leads to a rise in price as demand either increases or mops us the now scarcer supply.
While keeping in mind that dividends reflect past performance and can be discontinued, when combined with its substantial dividend, I am feeling good about my position in Transocean.
I believe that a true bottom in Transocean Offshore may take a while. However, one of the things I am looking for is actually a cut in their dividend, which is unsustainable in my opinion.
Though I have no way of knowing for sure, I believe the stock may react positively to a more rational or realistic dividend policy.
Going into the end of the year, I expect that the market will rise, but there will be some scary moments along the way.
The central banks in may big economies continue to print money, and for the life of me I cannot understand why gold and other commodities are not reacting to it.
Still, I would not be surprised to see more M&A activity within my portfolio. Specifically, I am watching RCI Hospitality Holdings (RICK), formerly known as Rick’s Cabaret, and Teva Pharmaceutical (TEVA).
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DISCLAIMER: The investments discussed are held in client accounts as of October 31, 2014. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
The post How I traded through October’s wild market swings appeared first on Smarter InvestingCovestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures.