Brief note on today's action, and on our core mix...

As I type the Dow's down 186 points (0.64%), the S&P 500 is down 0.78% and the Nasdaq Comp is down 1.19%. 

I wrote the following in yesterday's macro update:

"I have no doubt that markets the world over -- many already grappling with fragile fundamentals -- will begin pricing in more economic pain as a result of the virus."

I believe we're seeing a bit of that play out this morning.

I also wrote:

"I also have no doubt that we'll continue to see massive, across the board stimulus from central banks and governments. Think of it as a pulling forward of years of potential future stimulus, with all of the debt and misallocation of resources that comes with it. I know, not pleasant to think about."

My point being, sure, the powers-that-be may succeed yet again at propping the market up, but under no circumstances are we to consider such a scenario (the market rebounding) to be fundamentally justified or something we'd want to chase.

Made another slight tweak to our core allocation yesterday; here's from our log:

February 20, 2020: PWA Core Allocation (cut fxy by 50%; proceeds 25% to gld, 75% to fxe. The yen has been getting hammered on weak Japan data and fear of coronavirus spreading in Asia. Plus this morning, Fed’s Clarida quashed the idea of a US rate cut anytime soon. I believe the Fed will change that position in a hurry if present trends persist further into the year. I expect we’ll see intermittent strong rebounds in the yen/selloffs in the dollar. If the world can avert recession this year, and we see Japan data begin to bottom, we could see the yen trend notably stronger later in the year. Thus, we’ll maintain an albeit smaller position. Gold, while it’s had a nice run and will see pullbacks, is in the catbird’s seat right here).

Translations: fxy = Japanese Yen, gld = gold, fxe = the euro.

As for today's action in our core portfolio, ironically, while the market is selling off notably this morning, as I type our core mix is up 0.03% overall; with the following nicely in the green:

GLD (GOLD)

FXB (THE BRITISH POUND)

FXE (THE EURO)

XLRE (REITS)

RSX (RUSSIA)

FXY (THE JAPANESE YEN)

XLP (CONSUMER STAPLES)

SJB (SHORT JUNK BONDS)

XLU (UTILITIES)

XLV (HEALTH CARE)

And of course the S&P 500 put option is the best performer on the day.

Of course, and I can't emphasize this enough, one day never a trend makes! And the above positions (gld, fxb, fxe, fxy and sjb in particular) do not always go up when the market goes down, or go down when the market goes up. We own each for different reasons, but one thing they each have in common is that they possess relatively low correlation to stocks. Which is what we want given the current environment!

Note, if you check your stuff on line and your portfolio's move this morning isn't essentially flat (give or take, depending on when you look and what happens between now and then), it's because due to tax constraints specific to your situation when we rebalanced, you're not quite there, or your (or, say, your kids' or grandkids') portfolio isn't quite large enough to capture every position. We manage modified allocations for those smaller accounts...