It was another down week in the market and for my portfolio. The week finished a day earlier than usual as there was no trading on Friday, July 4th. Thursday was a slightly positive day for the market with the DOW and S&P ending the day both in positive territory. My portfolio was also slightly positive, but slightly less positive than the DOW and S&P. That makes my record against the DOW 6-3 and my record against the S&P 2-2. The big news of the week was the European Central Bank's move to raise short term interest rates by .25% and the seemingly never ending string of record-breaking oil prices. I began to raise more cash in my portfolio as it now appears we're headed for certain recession and I just can't see any improvement in the economic outlook or for consumers until we get lower prices at the pump. Hopefully, we will see lower gas prices this Fall. I've read reports of China building up their oil supply because they don't want there to be any shortages while their country is on display during the Olympics. The Olympics don't end until about August, 25th so I don't expect any relief until at least then. Meanwhile, fuel prices have risen so far so fast this year that it has really put a strain on businesses. Many companies have put fuel surcharges in place to offset the higher costs, but this has resulted in slower business. So, I want to sell the stocks in my Jim Cramer portfolio that I think will be hurt by this scenario and look for new stocks that are either unaffected or actually benefit from the current environment.
Warren Buffet Portfolio
Eaton Vance Tax Advantaged Dividend Income Fund (EVT) $23.01 - This closed end fund tends to track the market and it did so this week going lower. The two biggest sectors owned by the fund, energy and financials, are somewhat offsetting each other at the moment, but the remainder of the portfolio has been hurt by the downward direction of the market. The fund yields almost 8% so if it continues much lower, I will have to step in and add to my position.
General Electric (GE) $26.91 - The company will announce second quarter earnings on Friday. I'm expecting a decent report, but nothing that will cause investors to come flooding back into the stock. Lately, the company has been focusing on cutting costs and selling off their slower growth businesses such as their appliances division. I wish the company would change their name from General Electric to "Green Energy" as they are making a real push into green technologies. They are also using their NBC affiliates to push the idea to the general public and it's now somewhat "hip" to be green. GE also announced today that it would byuy "The eather Channel" and the weather.com website. "The Weather Channel" has also started made a push towards green programming. so I can see where this is going. For now, I'm happy to be getting a chance to buy at historically low prices. I'm not sure how long the sale will last, but as the stock goes lower I will add to my position. I will add to my position if the stock trades down to $25.
Coca Cola (KO) $51.48 - Hopefully, the stock is finding a bottom here in the low 50's. It's been drifting lower for several weeks and has been hurt recently by announcements of slowing growth from international bottlers. I believe the weaker dollar will offset the slowing growth and the company will be able to make earnings projections for this quarter. KO has long been seen as a safe haven among stocks when the economy slowed so I think the stock will start to hold up better even if the market continues to weaken.
McDonald's (MCD) $57.19 - The company is benefiting from consumers trading down and the weaker dollar is also helping. They have announced good same store sales growth for each of the first two months in the second quarter, so I expect a good report when second quarter earnings are announced soon.
Altria (MO) $20.12 - The stock suffered this week after a report came out that the government may outlaw sales of menthol cigarettes. I've read that MO doesn't have any exposure in this area, but the stock got hit anyway. Whether the company sells menthol cigarettes or not, I don't think this will hurt earnings because I can't see people switching from menthols to nothing. I want to buy more shares if the stock drops to $19.75.
US Bancorp (USB) $27.67 - The stock has been hurt lately by other banks' woes. To me, this looks bullish for USB. I'm not sure why this best-of-breed regional bank has gotten sold off as much as it has, but it's giving me a chance to add to my position while the stock is yielding over 6%. If the stock falls to $27, I will add to my position.
I will be back later to finish the rest of my report.
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