Investment Activity Review - May 2015

A very quiet month. Only one transaction and it’s a bit of a broken record now.

Added to short position on S&P 500 via HSD

I continue to hold on to the belief that stocks are ridiculously overpriced and very difficult to justify at current levels. Some reasons include:

  • The comments by Fed Reserve Chairwoman Janet Yellen that equity valuations are high could be that “Irrational Exuberance” moment.
  • The bond selloff as yields spiking appear to be foretelling an interest rate rise. Before the latest selloff, yields in some countries were the negative.
  • The Global “meh-conomy” continues to be tepid at best.
  • Margin debt remains at record highs.
  • Earnings growth is being fed by financial engineering via stock buybacks and dividend increases, not demand for goods and services. 
  • Risk is not in play as VIX index returns to its low teen levels. 
  • My Investor Consensus Blog postings are skewing heavily into positive consensus side of the chart, which often means clouds are on the horizon.

As much as I try to use data and facts to frame my investment decisions, another element is coming into play, guts. My bones and stomach are aching in conviction that the status quo is not sustainable and a serious retrenchment is at hand.  In May I continued my program to average down my short position every few months. Right now almost 1/3 of my portfolio is short. In terms of timelines, I have no ETA on when this so called correction is going to go down and as history has shown, when it does, it doesn’t send out press releases. It will happen when people least expect it.