Well, I’ve often heard that when the stock market bottom occurs it will feel absolutely horrible to own stocks and even foolhardy to contemplate a new purchase. It certainly feels like that now. Its hard to summon the requisite optimism to even look at the market or even my stock screen at this point.
But let’s soldier on anyway if we can. I came across an interesting video the other day that made me take a step back and consider the larger picture. This great little TED presentation is definitely worth a watch. Its important to remember that this too will pass and that a glorious future awaits us as long as we don’t screw things up too badly.
Ok, after watching that we should be able to shift our focus to the hapless BitLizard model portfolio with some perspective. This month we underperformed the S&P 500 by slightly less than 1 percentage point and our relative all-time performance against that index went oh so slightly negative. Given the carnage in the S&P it was a horrible month indeed. But tomorrow is the monthly trade day according to our rules. So its time to cart the dead bodies off to the morgue and search for new victims.
This month it will be easier to talk about the survivors instead of the laggards as there will only be 2 holdings that will survive the culling this month. AMPH is a liability insurer for physicians and has turned in a fabulous performance of -7.3% <sigh>. Good enough for this savage market. Our other survivor is TJX – yes, TJ Maxx – the retailer which is within spitting distance of actually showing us a profit. Its down just -0.9%.
Every other holding in the portfolio is toast with losses ranging from -21% to -31%. So these tickers join last month’s RHI and EIG in the year-long exile: ASML, BP, DECK, EMR, FRX, UTX, VLCCF and XOM. So are we going to find enough stocks in our screen to replace these 8 turkeys?
Well, yes. It appears that the stock screen is the eternal optimist. Our 8 replacements are as follows:
TOT – Total the French oil company
TS – Tenaris a steel company in Luxembourg
CMI – Cummins Engine
OLN – Olin a chemical and ammunition company (ok, I like this one)
NBL - Noble, another oil & gas firm
NUE – Nucor the big steel company
WDC – Western Digital a maker of computer disk drives and perpetual value stock
MUR – Murphy Oil – more oil & gas
It looks like this month’s theme is oil and steel. We are certainly going to have a contrarian portfolio this month! So we will buy sell our losers, divide the proceeds into 8 equal pieces, and then invest equally in these 8 issues at halfway between the day’s high and low. Hopefully our luck will turn with the start of spring.