This is Mrs. Scott Rothbort back helping Scott to publish Today’s My Gut. I can report that Scott is making some progress but he is not up to extracurricular activities such as live appearances and his late-night penning of this commentary. He still saves his energy for the daily grind of trading and performing market research.
Redeploying Capital to Technology, Emerging Markets and Small Cap Stocks
Last time Scott wrote, he noted that the technology stock sectors were in a bit of pullback. Technically that sector looked a bit weak, and was close to declining further, so Scott put the defense on the field to prevent any significant degradation of the Growth Portfolios from further declines. Rather quickly, the technology sector came back to life and Scott put capital back to work as the offense took the field. While there was an opportunity cost, of approximately 60 basis points, it was insurance worth expending. As it now stands, the Growth Portfolios are outpacing its benchmark Standard & Poor’s 500 (SPX) by about 100 basis points for the month, after accounting for the quarter client fees, transaction costs and, aforementioned 60 basis point cost of getting a little defensive.
Small cap stocks are coming back to life and are biotech stocks. Thus, Scott put a little cash into a biotech Exchange Traded Fund (ETF) which takes advantage of both trends, the SPDR S&P Biotech ETF (XBI). Also, Scott has allocated capital to the Russell 2000 (RUT), which is the representative index of small cap stocks, using the ProShares Russell 2000 ETF (UWM). Furthermore; Scott is allocating capital to emerging markets, again using exchange traded funds. Those markets are attracting global capital and the ETFs will benefit from a weak US Dollar (USD).
Not only does the market not care about what goes on in Washington DC, it rallied despite more Russia conspiracy leaks, a failed healthcare vote and a change in communications staff at the White House. And if, perchance you have not followed Scott’s advice to separate your pollical bias from your investment strategy, it has cost you dearly. However, he says it’s not too late because as you will see, earnings are strong, employment is on the rise and consumers are confident once again. Economic growth is picking up but there is room for significant improvement. If only Washington could get its act together and pass tax, infrastructure, and healthcare legislation as well as a budget, then the markets would take off like a rocket ship.
The frustration of corporate managers of the legislative dysfunction in Washington was best summed up by an earnings conference call rant by JP Morgan Chase’s (JPM) CEO, Jamie Dimon.
What to Expect in August
As the markets enter the busiest week of second quarter earnings season, and with there being a big FOMC meeting on Wednesday, it is worth noting that the four major US Indexes are all at or just slightly off all-time highs. However, once we get past Apple’s (AAPL) results next week, we will arrive at the August summer doldrums for the global markets. In the absence of any major news, the SPX tends to be flat in August, on average.
We need to be cognizant on the other hand, that August is also the month in which the markets got hit hard from: the Watergate scandal, resulting in President Nixon’s resignation in 1974 (-9.03%); the Iraqi invasion of Kuwait in 1990 (-9.43%); Russian Financial / Long Term Capital Management crises, US Embassy bombings and Monica Lewinsky scandal of 1998 (-14.58%) – that was one month that ruined my summer; Standard & Poor’s downgrade of US Treasury debt in 2011 (-5.68%); and, China’s currency devaluation in 2015 (-6.26%). So don’t get complacent as something can always come out of left field.
Scott wants to remind all of you that he can be reached by telephone or email as he continues to recuperate.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, EDC, EEM, SSO, SPXL & XIB — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– Read Scott’s intra-day thoughts and comments on Scutify for which he is a co-founder of its parent company Wall Street All-Stars, LLC
– You can email Scott at firstname.lastname@example.org
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