In a recent blog entry on The Big Picture, Barry Ritholtz said he raised cash levels to 25% in the allocation of assets. In summary he made the following moves below:
- Sold 50% of the energy positions
- Eliminated exposure to emerging markets
- Cut exposure to S&P 500 (SPY) by 50%
- Reduced position in Apple (AAPL) by one-third
- Maintained bullish position in health care
- Maintained bullish position in consumer staples
The absence of volatility may be ending. Ritholtz is watching the VIX (VXX).
The move to reduce exposure to stocks is not due to the terrifying fiscal cliff at the end of the year. The quarterly earnings results were weak, and are in danger of weakening further still in 2013.
There is nothing wrong with investors pulling back on their allocation to stocks. Kapitall’s David Neubert wrote recently about his positional change. He showed that discipline forces investors to make sales if stocks rise beyond a pre-set level. Stocks are sold when the original reason is no longer valid.
Business Section: Investing Ideas
2. Arena Pharmaceuticals, Inc. (ARNA, Earnings, Analysts, Financials): Focuses on discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. Market cap at $1.69B, most recent closing price at $7.79.
3. Pfizer Inc. (PFE, Earnings, Analysts, Financials): A biopharmaceutical company, offers prescription medicines for humans and animals worldwide. Market cap at $183.38B, most recent closing price at $24.55.
4. Merck & Co. Inc. (MRK, Earnings, Analysts, Financials): Provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. Market cap at $140.1B, most recent closing price at $46.0.
Bonds could be held in place of cash and cash equivalents. The risk is that they are sensitive to interest rate increases. The value falls when rates increase, but rise when rates remain low or fall further:
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Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
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- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Amarin Corporation plc (AMRN, Chart, Download SEC Filings)
- Arena Pharmaceuticals, Inc. (ARNA, Chart, Download SEC Filings)
- Pfizer Inc. (PFE, Chart, Download SEC Filings)
- Merck & Co. Inc. (MRK, Chart, Download SEC Filings)
- PIMCO Total Return ETF (BOND, Chart, Download SEC Filings)
- iShares Barclays 20+ Year Treasury Bond (TLT, Chart, Download SEC Filings)
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