Update: October 5, 2015

| October 5, 2015

October 5, 2015

 

Portfolio Update

While there still has been a fair amount of volatility since our last update, the last several trading days have been very good for US stocks.  The S&P 500 is already up over 3.5% in October after having a tough September.  The index is creeping back to even for the year.

Despite the stock correction in August and the volatile month of September, I still believe we’re in for a positive year for stocks.  Now, I don’t expect it to be much, but 3%-5% gains in US stocks by the end of the year still seems reasonable to me.

After all, the economy is still performing very well overall.  Yes, we’ve seen some recent economic reports fall short of expectations.  However, most of the negative news comes from manufacturing which is not a big part of US GDP anymore.  Employment, consumption, and housing numbers are still in pretty good shape.  And, that’s what matter the most at this point.

The biggest question mark (besides China) has been what the Fed will do with interest rates.  After the worse than expected September jobs report, many investors are now betting interest rates won’t go up until next year.  I could see it happen in December, but I doubt we’ll see a hike in the October meeting.  Also, there is no FOMC meeting in November.

For now, we’re looking at a moderately bullish last quarter.  There still could be some volatility related to emerging markets and such, but I think we’ll see mostly sideways action with a bullish bias.

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.

  • Freeport-McMoRan (FCX) December 9 Calls – The materials and mining industries are finally showing signs of life, and FCX has benefited greatly. In just one week since making the trade, our position has already been up 86%!  We’re just beneath our first profit-taking point, but with how quickly we’ve gotten here, it may make sense to be a little more aggressive on this position.

 

  • Alcoa (AA) December 10 Calls – I love AA’s plan to split into two companies, which is one main reason why we added calls in this company. And now, Alcoa just won a $1 billion parts deal with Airbus.  Our position is already up as much as 54% in just a week.  We’re closing in on the first profit-taking point.

 

  • SunEdison (SUNE) November 13 Calls – SUNE got crushed due to heavy selling in the solar industry. We’ve officially been stopped out of our position.  However, I still really like this company and believe in its long-term potential.  Of course, I also believe the selling has been overdone.  I may look to add this position back to our portfolio in the future.

 

Category: AOA Updates