Pepper-ation for What’s Next

“Why would anyone in their right mind volunteer to be pepper sprayed?” This is the question I was asking myself after I was pepper sprayed and had to defend myself during my annual two weeks of training at the Yaquina Bay Coast Guard Station in Newport, OR. This is how it was described to me beforehand, “…it’s like dipping your face in a hot fryer, sticking needles your eyes and then you have to fight someone off.” It turns out that’s pretty accurate. The photo I took was over an hour later after I was feeling much better. They didn’t allow pictures before then.

Getting sprayed and then having to defend myself, along with rigorous physical training, law enforcement education, and firearms instruction was required to qualify as a boarding team member at the station. Other than being sprayed, it turned out to be a great experience and I can now be more useful during my time as a reservist in Newport and abroad.

It took about 24 hours to wear off, but I can now say I’m much more prepared to handle a situation involving pepper spray. That’s the reason the USCG mandates law enforcement personnel be sprayed – it’s a stress test to ensure the officers are prepared. A little less painful, but just as important, is the “pepper-ation” we go through to make sure accounts are in good shape to handle either the next downturn or uptrend, in the stock market. The last few weeks we’ve continued making changes across all accounts to prepare for this.

Moderate and Conservative Accounts

In our more conservative accounts, we’ve continued selling individual stocks and replacing them with funds to provide more diversification. This will eliminate the stock specific risks while also helping to participate better with the stock market when it goes higher.

With the cash we received from selling, we bought a bond fund called First Trust Enhanced Short Maturity FTSM. We also bought a 4-year individual Bank of America Bond paying 3%. These investments were bought to maintain stability in case the market goes down in response to the global trade drama.

We’ve also been taking advantage of the guarantees that a few insurance companies are offering. Some that we’ve been looking at go up with the stock market to some extent, but cannot go below 0%. These annuities are not products we’ve typically been encouraging people to invest in (in fact, we’ve felt strongly against annuities for some time), but they’re now becoming more attractive as an acceptable bond replacement due to rising interest rates. There’s quite a bit more detail on these. We can provide additional information if anyone has questions.


Growth Stock Account

In the more aggressive growth accounts, the mandate is less about reducing volatility, and more about capturing as much growth and we can. Stress testing these accounts means looking to see what stocks are underperforming and replacing them with companies that could grow more.

Because of this we’ve sold a salt-mining company that disappointed us, Compass Minerals CMP, and replaced it with a company we’re very familiar with Intuit INTU. Intuit is a software company behind the online tax preparation company Turbo Tax (I’m a customer), the small business bookkeeping program Quickbooks (we use this in the office), and the budgeting website and app (I also use this). Intuit seems to have the market cornered in these areas and we expect big things from them moving forward.

We realize summer is not the most compelling time to be focused on your investment accounts, but in case anyone has any questions, please don’t hesitate to contact us.

Thanks for reading,

Tim Porter, CFP®