This morning we closed all our open blog picks (6 longs and 1 short) and went neutral on the portfolio for a total gain of 2.5% since September 3, and an overall portfolio gain of +8% since July 30. In contrast, if you were to buy and hold the S&P in the same period you’d have a loss of about -2% today.
The clear patterns we were seeing in the markets earlier are starting to change. This is could simply be some large portfolio re-balancing, or it could be the start of a period of volatility due to government shutdown. Either way we expect many other investors who are seeing the same things we are to take the same action and go to cash. We do not expect a market crash by any means, but at some point when this volatility is over there will be some good names available at good prices so it’s best just to keep the powder dry.
We are therefore moving to cash until the current environment resolves itself. During this time we will continue to perform algorithmic scans to identify any new patterns that might be emerging this season. Brief commentary on each of our closed positions is below: