FANTASTIC May performance!!

Paul Wildberger |
Categories
Investments
Wealth Management
Finance

Happy beginning of summer to you all – I AM VERY EXCITED to update you on portfolio performance for May!

 

  1. During a month that the S&P 500 is down -6.3% (as-of May 31st), our average portfolio is -0.6%
    1. This is primarily attributable to 2 asset classes that we began focusing on in March: bonds and gold (still my favorite choices for the next 18 mos)
    2. The majority of our portfolio models are out of the stock market; however, a few sectors remain:
      1. Consumer Staples (toiletries; considered a defensive sector in times of market volatility, especially at the end of a market up cycle)
        1. 10% current portfolio allocation
      2. Dividend growth (blue-chip strong dividend-paying stocks; also considered defensive)
        1. 10% current portfolio allocation
      3. International stocks (managed fund in both Developed and Emerging economies)
        1. 10% current portfolio allocation
      4. Small-cap Value (small company stocks focused on value vs growth)
        1. 5% current portfolio allocation
      5. Each of these allocations have been hit by the May slide, albeit to a lesser degree.  As previously outlined, this remaining 35% of the portfolio will be liquidated over the next few months as expected rebounds occur

 

  1. Our most recent change occurred yesterday, when we bought our Gold Miner Index Structured Note.  Our timing could not have been more divinely inspired; the Gold Miner Index (symbol GDX) yesterday was $20.77 – today it’s $21.55 (+3.80%).  As a reminder of this strategy, here are the details:
    1. 20% average portfolio allocation
    2. 15 mo note
      1. Callable after 6 months if GDX is >= 10% rise (this is a very real possibility; if called (redeemed by issuer), we will examine similar Notes that make sense at the time)
    3. 8.4% annual yield, paid monthly
    4. 25% downside barrier: meaning, so long as GDX doesn’t drop below $15.58/shr during the next 15 months, your monthly interest payments go as scheduled.  IF it drops below the $15.58 threshold, we lose that month’s interest and buy into the GDX position.  This is very unlikely given where we are in the market cycle.  The 3-yr low for GDX is $17.88

 

  1. As previously noted, the primary driver of May’s decline is the tariff scare with China, and now, Mexico.  Although I believe cooler heads will prevail in late June when Trump and Xi meet at the G-20 conference, it will be a volatile, rocky road for the foreseeable future.  Furthermore, signs of a global economic slowdown continue and I fully expect to see us in a market decline/recession by early next year.

 

Many thanks to my clients who have entrusted their wealth management to my firm – please let me know if you have ANY questions or concerns!

 

Paul