Update: July 18, 2016

| July 18, 2016

July 18, 2016

 

Portfolio Update

Not only have investors moved on from Brexit, they basically have forgotten all about it.  Major US stock indexes are reaching new highs, and nothing seems to be able to derail the current enthusiasm towards equities.  In fact, the S&P 500 is up over 7% for the year.

Granted, the S&P 500 12-month trailing P/E ratio is over 19x at the moment.  The 15-year average is 17.5x, so the level is a bit high from a historical perspective.  As such, it’s not a stretch to say stocks are overpriced at the moment.  Still, investors are shrugging off some pretty hairy macro events and continue to buy into the market regardless.

The elevated P/E of stocks could suggest equity markets will experience a selloff sometime in the near future.  On the other hand, it could signal that this earnings season is going to produce a lot of upside surprises.  Or, it could simply be that stocks are going to trade at a higher P/E ratio for a while.  With the market these days, it’s never a sure thing.

In other news, silver has been the top performer among major assets.  The precious metal is up over 44% year-to-date.  Gold is up 25% in comparison.  Other key performers: soybeans are up 23%, 30-year bonds are up 14%, the Russell 200 is up 7.5%, 10-year bonds are up 5%, and crude oil is up 2%.

The results are fairly mixed across asset classes, but we’re mostly seeing green (positive) across the board these days when it comes to major assets.

Let’s take a look at some portfolio highlights…

 

Portfolio Highlights

Just a quick note:  We won’t update every open position every update.  I try to focus on the positions that have some significant news or price movement.

  • Bank of America (BAC) September 13 Calls – BAC shares have surged higher on optimistic earnings news. We’ve only had this position for a week, and we’re already about to hit our first exit point for profit-taking.  Peak gains so far are 61%.

 

  • Cisco Systems (CSCO) September 28 Calls – CSCO has been a big beneficiary of the recent surge in stocks. The stock is up 2% since last week, and 5% over the last month.  We recently hit our first exit point for taking profits.  Peak gains to date are 171%!

 

  • Aceto (ACET) August 22.5 Calls – ACET has been in our portfolio since late May, but has just recently gained steam. In fact, the stock has gained 12% over the last month.  The share price shot past our conservative profit-taking point and is closing in on the aggressive exit level.  Peak gains in this position are 173%!

 

Category: AOA Updates

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