Emblematic of much of the year's trading, our portfolio managed to eke a positive gain for the month even as the major indices lost 5+% en masse. Of course, we have seen these imbalances swing just as wildly back in the other direction in recent months so now is not the time to get too congratulatory or comfortable. Finance folklore holds September and October as particularly eventful months in the market trading so plenty of action lies ahead.
Nevertheless, a 1% return this year while retaining significant cash holding must be viewed as a success. As members know, I have begun to slowly put that money to work, in small companies entirely dependent on the US economy for their well-being. While both businesses are struggling, I conclude that both are sustainable over the long term and are too heavily discounted at the present. At times, successful investing must be accomplished by pinching your nose while buying "stinkers" and hopefully this is one of those times.
Still, an interesting approach continues to gain hold in my thinking. As reports of municipal and government struggles to deal with burgeoning debt and welfare obligations continue to come in, the idea that corporations — beholden to no one (not even shareholders in some practical cases!) and adaptable to all sorts of economic conditions — may present the best vehicle for investors to ride out any upcoming turbulence. However, not any ol' corporation will do; we must seek out those monoliths which have become institutions in themselves and of course, the price must be right.
Members have already witnessed investments in several large mega-caps, with a few more names in serious consideration. All offer decent-to-attractive dividends which promise to increase annually.
Don't expect any moves today, when stocks are up 3-5% across the board but don't be surprised if further mega-cap additions are announced.