The overall market, at least as measured by the S&P 500 dropped 7% in September. Except for a couple of our Sample Portfolios, we barely kept up.
Starting with our Samples, our Conservative portfolio gained 1%. High Yield/Speculators dropped 4%, and Growth & Income lost 9%.
All of our Industry and Specialty portfolios recorded losses. Exactly half of them (9) beat or tied the S&P 500 and half underperformed the index. Here’s the list.
| Portfolio | Avg. Return% |
Utilities | -1% |
Insurance | -3% |
ETF Monthly Income | -3% |
Canada Real Estate Investment Trusts | -3% |
Preferred Stocks | -3% |
Partnerships - Energy | -6% |
Rural Telecom | -7% |
US Real Estate Investment Trusts | -7% |
Manufacturing & Services | -7% |
Business Development Corps. | -8% |
Regional Banks | -8% |
Closed-End Funds | -9% |
Large Banks | -9% |
Canada Energy | -9% |
Oil Industry | -9% |
Dividend Speculators | -11% |
Canada Stocks Ex-Energy | -11% |
Partnerships Ex-Energy | -11% |
What Happened European debt crisis ?
The European debt crisis and the possibility of it triggering a global recession overshadowed everything. Especially hard hit were energy stocks and everything related to the financial services industry, especially banks. Any company doing significant business outside the U.S. got hit. For instance, diversified chemical company DuPont, which dominates most of the markets where it participates, and is one of our most solid and fastest growing stocks, sunk 17% in September.
The European debt crisis and the possibility of it triggering a global recession overshadowed everything. Especially hard hit were energy stocks and everything related to the financial services industry, especially banks. Any company doing significant business outside the U.S. got hit. For instance, diversified chemical company DuPont, which dominates most of the markets where it participates, and is one of our most solid and fastest growing stocks, sunk 17% in September.
What's Next?
Towards the end of October, U.S. stocks will start reporting September quarter results. Assuming that as many expect, those reports come in generally good and the Europeans manage to muddle through, the market could strengthen. That would be consistent with usual seasonal swings. If you look at history, the market is typically down in September and that weakness often continues for the first week or two of October. Then it takes off at least until year’s-end.
Towards the end of October, U.S. stocks will start reporting September quarter results. Assuming that as many expect, those reports come in generally good and the Europeans manage to muddle through, the market could strengthen. That would be consistent with usual seasonal swings. If you look at history, the market is typically down in September and that weakness often continues for the first week or two of October. Then it takes off at least until year’s-end.
Unfortunately, many things could go wrong. So we can’t bet the ranch on the rosy scenario that I described. Instead, we must be defensive and continue to reduce the risk profiles of our portfolios, just in case things don’t get better.
What's New?
In our Sample Portfolios, we’re making two changes, one each in Growth & Income and in High Yield/Speculative, both with the goal of reducing portfolio volatility.
In our Sample Portfolios, we’re making two changes, one each in Growth & Income and in High Yield/Speculative, both with the goal of reducing portfolio volatility.
In our Preferreds portfolio, we’re selling two existing picks and replacing them with two preferreds credit rated “A” by S&P, One offering a 6.2% yield to new money and the other is at 5.4%.
We’re also selling two stocks from our Partnerships Excluding Energy portfolio and one each from Business Development Corporations, Energy Partnerships, Rural Telecoms, and Canadian Stocks (excluding energy). In all instances, the moves are intended to reduce each portfolio’s risk profile.
In addition, we’ve downgraded one Preferred, U.S. Real Estate Investment Trust, and one Rural Telecom pick to “do not add” from “buy.” Conversely, we’re upgrading one Preferred to “buy” from “do not add.”
We’ve also changed our Risk Ratings on three Preferreds, one pick in our ETF Monthly portfolio, and one Dividend Speculator.
Looking at dividends, one Manufacturing & Services pick raised its quarterly payout by 15%, and one Closed-End fund declared a 6% special payout and raised its quarterly dividend by 2%. Also, one REIT cut its payout by 8%.