It is always a bit of a balancing act, as markets rise to new highs, to decide whether to, as we say in Las Vegas, “let it ride” or “take some money off the table.” There are of course many factors to consider such as: how individual stocks measure up against their own price targets; the risk to the downside versus benefit to the upside; tax impact; time of year; and, finally as I always say, what my gut is telling me.
Many money managers, after a strong performance, just past the halfway mark of the year, will tend to move to cash and head to the golf course, beach, racetrack, Europe, or some other place of diversion and take an extended vacation till September. I don’t advocate doing so, though I will take a day or two here and there on my boat or at Saratoga Springs, entertaining clients.
Considering all the above, I am going to raise some cash. There are some signals out there telling me that we are likely to have a 5 – 10% pullback in the coming weeks. Part of that reasoning is that many stocks are getting pretty close to fair value (based on current earnings estimates for 2019). Another part is in the knowledge that August tends to be a soggy month for stocks. Any pullback will be recouped by the end of the year.
How I decide to raise cash is part science and part art. I will trim back on some growth sectors, selling high cost basis holdings and leaving core holdings. I already have cut back on my exposure to the Diabetes medical device market by about 40 – 50%.
Take for example Alphabet (GOOGL). I own that stock for our Growth portfolios going back to January 2011 when the stock was just above $300. While the company will report results this week, I just don’t see where the company or the stock is headed from here. Since the beginning of 2018, GOOGL has gone nowhere, under-performing the broader market. It also went from being nearly 5% of the portfolios several quarters ago, to just over 1% as I write. GOOGL is marked for sale and will likely be off the books if not today, then soon. In my opinion, GOOGL will go the way of Netflix (NFLX) which has traded straight down since releasing results a few days ago. NFLX best days as a stock are in the rear view mirror.
I am in the process of bringing back to life my old Mercedes-Benz 1985 500 SEL. It has been sitting in my garage in Bolton for a few years. I had it towed to the Mercedes dealer in Schenectady. They put in a new fuel pump and got it started. I will keep you up on news of the reclamation project. They don’t make cars like that anymore.
P.S. Happy birthday to my father-in-law Arthur.
Video of starting car up:
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GOOGL – 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
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