Selling on valuation
This hasn't made much of a dent in the portfolio's cash position. In 2013 to date I've made six buys and executed five sells.
I've continued to sell on valuation -- out with Westpac Banking (WBK) and Akamai Technologies (AKAM) in recent weeks -- as stocks hit my valuations and I can't think of sound reasons for resetting them higher. (You can find a list of recent sells at the Jubak's Picks website.)
I've looked for relatively low-risk opportunities -- you might call them special situations -- to add to the portfolio. These are occasions where fundamentals or global cash flows or temporary market overreactions to news give me a reasonable confidence that the risk/reward ratio is slanted in my favor. My recent additions of Toyota Motor (TM) and Mitsubishi UFJ Financial (MTU) fall into that category. In the short-term, say one to three months, I think the weak yen policy of the Bank of Japan puts a strong macro wind at the back of Japanese stocks. The risk/reward ratio in that market is slanted in investors' favor.
I continue to worry about the economic and political trends in the eurozone. I think we can look for one more big crisis in the eurozone before the German election in September. That makes me extremely reluctant to buy in Europe, even though I think stocks such as Danone (DANOY), which trades as BN.FP in Paris, are extremely attractive in the long run.
I continue to worry about overinflated expectations for economic growth in China. To me it looks as if the Chinese government has decided NOT to go for a return to 9% annual growth, but to stick with 7.5% to 8% growth. (Read "How to profit from China's slowdown.) That will be a disappointment -- and, to a degree, it already has been -- for investors in companies, such as commodity producers that have put capital plans in place predicated on that kind of acceleration.
At the same time I recognize that these fears -- and the very real, very slow growth in Japan and the eurozone -- make it likely that the United States will outperform most of the world's stock markets again this year. The most recent stage of the U.S. rally has been driven by dividend-paying, consumer blue chips. McDonald's (MCD) was up 15.25% for 2013 as of April 26, and Abbott Laboratories (ABT) was up 17.23%, for example.
Seeking special situations
I'm hoping that recent additions to Jubak's Picks of diabetes specialist DaVita Healthcare Partners (DVA) and electronic payments leader eBay (EBAY) will get the same kind of boost, so I was willing to buy them on temporary, stock-specific drops.
I'm not willing to chase dividend-paying blue chips here because they are already relatively expensive against historical norms. But I am likely to hold onto them longer than I might otherwise in recognition of the extra value this market is putting on dividends and predictability.
In the U.S. market, I think one of the strongest trends is the way that the natural gas and oil from shale boom is transforming swaths of U.S. industry and infrastructure. I've got a pick or two from that trend in mind for the coming weeks -- especially if I can get the stocks in question on dips.
Another special situation that I'm looking to buy is what I call improving-balance-sheet plays. These are companies where the supply of cheap money and decent economic growth are combining to lift their credit ratings from junk to investment grade. That improvement by itself gives these stocks a considerable edge even if growth slows modestly, since improved balance sheets should push enough cash to the bottom line of the income statements to provide an insurance policy against slower growth. I'll have a pick or two from this category in the next couple of weeks.
At the same time, though, I anticipate that I'll be making a sell or two or three to reduce the potential risk in the portfolio.
That's likely to leave Jubak's Picks pretty much where it is now, at about 30% cash.
Unless, of course, we do get a summer slump in the U.S. or a big sell-off somewhere else that presents me with exactly the kind of bargains I've been waiting for.
Updates to Jubak's picks
These recent blog posts contain updates to the stocks in Jubak's market-beating portfolios.
- Newmont Mining surprises with a dividend cut
- EBay becomes an attractive financial stock
- Apple's new reality: Stock tied to product cycles
- Citigroup has some upside for investors
- Alcoa's success shines light on Toray
At the time of publication, Jim Jubak did not own or control shares of any company mentioned in this post in his personal portfolio. When in 2010 he started the mutual fund he manages, Jubak Global Equity Fund (JUBAX), he liquidated all his individual stock holdings and put the money into the fund. The fund did own positions in McDonald's, Mitsubishi Financial UFJ and Toyota Motor as of the end of March.
Jim Jubak's column has run on MSN Money since 1997. He is the author of the book "The Jubak Picks," based on his market-beating Jubak's Picks portfolio; the writer of the Jubak's Picks blog; and the senior markets editor at MoneyShow.com. Get a free 60-day trial subscription to JAM, his premium investment letter, by using this code: MSN60 when you register at the Jubak Asset Management website.
Click here to find Jubak's most recent articles, blog posts and stock picks.
VIDEO ON MSN MONEY
Breaking records on Wacko Street everyday is not helping the average person.Bubbles are nice in the bath tub but I don't want to be near the one they are making.KABOOM
The business pundits like to compare the federal deficit to GDP by using the “deficit to GDP ratio.” Right now the deficit totals about $15 trillion and the GDP is about $14 trillion. So they say the deficit is about 100% plus of GDP. But that makes it sound much better than it is. As if in just one year of GDP they could pay the debt off completely. Well the government doesn’t get $14 trillion each year. They only collect about $2.4 trillion in taxes out of the $14 trillion. So they should be comparing the deficit to the government’s annual income of $2.4 trillion. In this comparison the government now owes more than 6 times its annual income. If they paid for nothing else for 6 years, and put everything they collect into paying down the debt, they would come close to a payoff. That means no defense, no medicare, no social security, on and on, for six years. Never going to happen.
Let’s look at this from the perspective of a family income and budget. What if we owed 6 times our annual income? Say at an annual salary of $50,000, you would owe $300,000. $300,000 is way too much debt for a $50,000 income. How could a family in this predicament ever pay this off? They couldn’t. This is the same predicament the government is in right now. From this you can really start to see how deep the trouble the government is in. And you can see they’ll never be able to pay it back either.
There has been a massive failure of late of what has happen and why. Sure, there is massive Global Money Printing. However, that printing is dwarfed by the Money Printing which is the Derivatives Markets. If you compare the amount of farce Derivatives to the amount of Global Fed Money Printing, there really is no comparison. Yet the mainstream Media refuses to talk about it.
Small ball, schmall ball!
It's all just Fed Reserve propped up pocket pool.
MSN editors, this is the kind of content we want! We need content to help us in our financial planning. With pensions all but gone, 401K's are about all we have to rely on in future years. Your readers hunger for good investing advice. This is the content you should be featuring. Stop featuring absolute junk, like today's article comparing name length to income. No one gives a tinkers dam! Jubak and Fleckenstein - they're the reason we come back. Get it???
I think we are still coming out of the mentality of our 401k coming the 201k. Jubak is simply trying to figure out when many stocks have come back to its ten year high, there's got to be an adjustment. For example, VZ Verizon I held over ten years while kids grew up and it finally came back to give me a little profit. Sold it. Now I had VZ again in the dip, like any monkey back in 2008 who bought, and I saw VZ rise to its 10 year high again and I cashed out, back in june 2012, remembering all too well the 201k effect. But no adjustment came, then in Feb 2013 it almost came back to my selling price, and I thought better get back in. But I didn't pull the trigger. Since then VZ has gone up 32 percent, 15 year high. What is driving this? I think Jubak is right. Europe, Japan, China banks are giving no wind. But the good old USA Fed Reserve is. Maybe foreign investors are driving this. Even now VZ dividend is still paying 4 percent in dividend on your money. Cash is getting nothing. So where are you going to put it.
Sorry to say, I am still in cash waiting for news to say something that changes things. I missed the ride.
The only thing I can see that is wrong with this method is putting your money into cash instead of mutual fund bonds. You can make 6-7 percent with most bonds and a little more with aggressive bonds that follow the market to a lesser extent. Then when opportunity presents itself, you have the funds that can be transferred just as easy as cash can. Beating the market assumes you invest no money in bonds. The old rule of investing your age in bonds kind of guarantees you will never beat the market.
Is this another article about Asia?
Remember kids, most of the posts here are by MSN employees. You know, just to stir the soup up.
Let me try that one more time.
Most of the posts here are by MSN employees.
Except for the posts by Jane Fonda under her alias.
Get it? Now, log off and go to a topless bar. Ice cold beer! Yum.
If you are going to write a column about money management, the best thing you can do for your readers is to be accurate and handily beat the market averages. Anyone can make inaccurate predictions. In fact, most columns tend to predict doom and gloom frightening investors who have done their homework for their purchases which only favors the inside wall street traders.
When you invest, you have to look at the entire world. If you are dubious about the United States, then look at your alternatives. I think most of us will find that the USA is still the best place to put your hard earned money.
NO NO NO
I refuse to click on page 2 of this dribble. You write a story about how nobody, including yourself, knows what to do and then you support this theory by telling us how if we had invested with you we would have lost money because you sold all of your winners too soon and held on to the losers? What is this about again? MSN MONEY you entertain me to no end but somewhere on an island there is a man called Bill Gates who could take all my pain away by simply FIRING you, Mirhaydari and Fleckenstein. Exactly how does MSN MONEY compliment the Microsoft Empire when your advice is always wrong? I bet we keep going higher until Bernanke pulls the plug. There, I said it. No need for another Jubak article until August.
Jubak is a loser and he admits it. Why would you even think of taking his advice or following his lead,The two stocks he sold and lost on was his own stupidity and not enough planning.
All is well known the market is about to slow down on growth. Its just when and are you situated.
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[BRIEFING.COM] Two hours into the session, the major averages are holding their recent levels with the Nasdaq (+0.3%) leading while the S&P 500 (+0.1%) sports a two-point gain.
Individual sectors trade in mixed fashion with technology (+0.5%), health care (+0.4%) and consumer discretionary (+0.2%) setting the pace while energy (-0.2%), financials (-0.2%), and materials (-0.1%) lag.
Today's leading sector, technology, is receiving considerable support from its top component, ... More
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