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August Recap

SPX August

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August is finally past us and the S&P 500 lost -6.7%   –   although it could have been worse had we not bottomed and bounced the past couple of days.

In the past couple of blog posts, I told you I had been buying during the panic selling.  I won’t repeat the reasons for the purchases today, rather I point you to the previous few posts for clarity.

However, I thought you might like to see what we purchased with the cash we had on hand and how those have performed since we bought them.  So, below is the list of stocks we purchased and the percentage return since purchase:

Cal-Maine Foods  (CALM):  +7.26%                                                 Southwest Airlines (LUV):  -3.50%

AT&T (T):  +1.79%                                                                                    Boston Beer (SAM):  +1.16%

Eli Lilly (LLY):  +0.99%                                                                          Facebook (FB):  +8.12%

Kroger (KR):  +1.31%                                                                               Middleby Corp (MIDD):  +2.22%

SunEdison (SUNE):  -4.54%                                                                 Tractor Supply Co  (TSCO):  +1.67%

Accenture   (ACN):  -0.29%                                                                    Alexion Pharmaceuticals (ALXN):  +0.90%

Amazon  (AMZN):  +6.07%                                                                    CyberArk Software  (CYBR):  +6.70%

Ecolab  (ECL):  +1.66%                                                                             Ellie Mae  (ELLI):  +1.86%

EZchip Semiconductor (EZCH):  +8.73%                                          Occidental Petroleum (OXY):  +7.20%

Paypal Holdings  (PYPL):  +2.84%                                                       Schlumberger  (SLB):  +5.16%

Syngenta AG  (SYT):  +0.71%                                                                 Yahoo Inc   (YHOO):  +2.86%

You can tell from the list that it we purposely employed a barbell strategy to focus on (1) defensive companies that would limit downside if the market took another tumble (AT&T, Eli Lilly, Kroger, Ecolab, Boston Beer, etc.) and (2) high growth companies that had sold off greater than the market itself and would be due for a big bounce back when the market moved higher (EZchip, Paypal, Amazon, Facebook, Alexion, CyberArk, etc.).

For the most part, I am happy with how it has turned out –  the defensive stocks were up small as expected and the aggressive stocks were up big as expected.  Of the three that we have lost on, the losses are less than the market overall and there are still reasons to buy these companies at today’s levels.

Today, the market pulled back a bit under 1% which is to be expected given the past few days of big gains recovering some of the sell-off.  What’s in store for the rest of the year?  We need to watch the same things that caused us grief during August:  China, the dollar, automated trading programs, and the Federal Reserve’s threat to raise interest rates.

If the market continues higher and approaches its previous high, we will likely raise cash again.  Will it?  A lot of technical damage was done to the market during August.  Support levels were broken and investor confidence was shaken.  Believe it or not, those are good things to have happen from time to time.  It tends to shake out the weak hands and correct excesses – like the significant level of margin investing that was in place prior to the sell-off.  It also solidifies the fact that a well thought out strategy beats index investing hands down as the indices fall and there is no one there to manage the investments.

As things develop in the markets, I will be here on the blog updating you about what’s happening and what we are doing about it.  If you haven’t signed up to receive email notices of new posts, you can do that by clicking the subscribe link above.

 Mark