Dear client or friend of Vailshire Capital Management,
Happy Labor Day! I hope that each of you is finding time to rest and reconnect with people you love today.
Today’s monthly update should be quick, so you can get back to your grills!
Market Conditions
Our defensive stance has paid off lately, as evidenced by our investment account returns. While the S&P 500 ended the month of August down -1.8%, our Vailshire accounts have gainedanywhere from +1.3 to +3.2%, depending on individual asset allocations.
Given the continued and worsening deceleration of company earnings in Q3 2019, yield curve inversion, tariff worries, declining industrial and manufacturing productivity, deflationary pressures, and increased market volatility–I expect September to be another tough month for owners of general stock market index funds and ETFs. Bogleheads, beware.
Essentially unchanged from the beginning of August, our portfolios still consist of highly defensive, low volatility positions that historically outperform the rest of the market during such tumultuous times. These asset classes include:
- Utilities
- Real estate investment trusts (REITs)
- US Treasurys
- International sovereign bonds
- Preferred stocks
- Gold/Silver
- Some healthcare equities
- Some consumer staples equities
- US Dollars (cash)
While holding the above list of defensive positions, we are actively avoiding sectors that traditionally underperform in such periods, like: energy, financials, US small caps, technology, and high-volatility equities, among others.
Feel free to investigate your account(s) and notice how your portfolios are accordingly positioned.
Conclusion
Given my dual mandate of growing and protecting your hard-earned savings, we are currently in “protection mode,” while constantly looking for opportunities to profit from underlying market anomalies. When the fundamentals change, we will be ready to make our move and take positions in higher growth sectors while the rest of market indiscriminately panics and sells to us at fire-sale prices.
I continue to be optimistic regarding our outlook… I hope you do, too.
Investing wisely with you,
Jeff