Calm AFTER the Storm

Calm Pic

In mid February we wrote about the “storm” we were in as we watched the stock market plummet 10% in short order. We mentioned having the courage to endure markets like this because it’s not easy to watch emotional swings affect our savings so dramatically. Usually it takes a fair amount of time to bounce back from situations like these, however, this storm passed relatively quickly and Josh Peters, CFA from Morningstar has made recommendations that held up well.

In the first 32 days of the year (Feb. 11) the S&P was down 10% while the growing-dividend equities in Peters portfolio were down less than half that. In the subsequent 42 days of the year, the stock market has climbed back 10% and Peters’ equities have risen close to the same amount (9% according to his newsletter). This leaves anyone invested in these stocks up nicely since the beginning of the year while the S&P struggles to stay positive. (Returns will vary depending on risk and individual portfolios.)

Even though we’re thankful for the great year-to-date performance of the conservative growing-dividend philosophy, we still remain concerned about the next storm and in an effort to prepare, we’re currently rebalancing all of our accounts. This is generating trades, which will show up as notices in our client’s mailbox. These are not major changes, but are more like tweaks to ensure portfolios are within guidelines after some investments have underperformed and some have outperformed since the beginning of the year.

A few of the stocks that have outperformed are Fastenal FAST, an industrial construction supplier, and Genuine Parts GPC, an automotive parts supplier. These stocks have taken off since late January, returning 33% and 23% respectively, not including dividends. These stocks are not huge dividend payers, with yields of 2.63% and 2.41%, but we’re happy to have low yields in addition to nice growth. Once again, we credit Peters for having the foresight to recommend these stocks for us and look forward to his next recommendation.

As we work through these rebalances we’ll be calling our clients to give updates on their specific situation. We look forward to catching up on what’s going on in their lives and discussing the good news that we survived the storm!

Happy tax season,

Tim Porter, CFP®