Seeing that the world isn't ending, at least this morning, I have rebalanced each of the models.
For Top 20, we are selling the rest of a Technology name that has been a disappointment since earlier this year and trimming another one that has been outperforming. Technology has been one of our biggest sectors in the model, and the sector has been doing well of late. The sell offers 39% return to my target, while the trim is 44%. The trim is slightly overbought, which is in stark contrast to the rest of the market. On the buy, we are adding a name that we had sold last year in the Consumer Discretionary sector after enjoying a huge run. It has declined subsequently, though it went on to higher highs after we sold. This name offers 55% roughly to my target. Best of all, I think that the company will do very well in a continued sluggish environment. It really stands out in comparsion to its three largest customers in terms of valuation and recent performance. I believe that it has been primarily a victim of its own success (profit-taking). The name isn't widely followed and trades somewhat thinly (please don't put a market on open buy!). We are also adding to our single Financial name in the model. I reduced my target, but it still offers 73% return over the next year. The stock had been doing quite well but was slammed as Emerging Markets cratered last week.
In Conservative Growth/Balanced, we are adding a small position in a new name. This Financial has been slammed due to its investment portfolio's exposure to Europe. I have reviewed the portfolio as well as the earnings power of the company and have concluded that the market has most likely overreacted. Still, while this is a very "blue-chip" company and will certainly face no liquidity issues (it's an insurance company), I am taking into account some more potential downside and keeping the position smaller than the 70% return to my target would normally warrant. My target is below the 52-week high. We are buying this from cash, which was raised a week ago when we sold MCHP, bringing our equity exposure back to the maximum of 75%.
In Sector Selector ETF, we are continuing the shift that we began earlier this month from Technology to Industrials. I see a disconnect here, as the two sectors should track each other fairly well given that both have similary high exposure to overseas sales.
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