Hard to find anything positive about this kind of carnage in the markets, but the portfolio continues to outperform the Wilshire 5000 and at ever higher margins. Although this is consistent with the defensive structure of the portfolio, the fact that we have a much higher percentage of finance and insurance companies than most yet still managed to outperform leaves me happy.
The beauty of having a dividend-rich portfolio is that it becomes easier to just collect the dividends and wait it out.
Not only that, I have a hard time buying the bear argument that the subprime contagion will extend as broadly as the index performance suggests. I understand that the consumer is the engine of the economy, and that if a segment of homeowners pulls back, it can affect economic growth. Having a lot of consumer staple stocks certainly dampens my fear, but apart from that, what about the falling dollar and what that is doing for exports?
Just as a lot of the prior bullishness was not founded in reality, so too is a lot of the bearishness we are seeing today.
A final note is that in looking at long term indicators we have not entered a bear market. Certainly if that changes, some portfolio adjustments will be made. But, let us not jump the gun when the evidence does not merit more drastic action.
The beauty of having a dividend-rich portfolio is that it becomes easier to just collect the dividends and wait it out.
Not only that, I have a hard time buying the bear argument that the subprime contagion will extend as broadly as the index performance suggests. I understand that the consumer is the engine of the economy, and that if a segment of homeowners pulls back, it can affect economic growth. Having a lot of consumer staple stocks certainly dampens my fear, but apart from that, what about the falling dollar and what that is doing for exports?
Just as a lot of the prior bullishness was not founded in reality, so too is a lot of the bearishness we are seeing today.
A final note is that in looking at long term indicators we have not entered a bear market. Certainly if that changes, some portfolio adjustments will be made. But, let us not jump the gun when the evidence does not merit more drastic action.
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