The long awaited correction is finally here. What a dropdown last week witnessed. After continued strength in the bull market, we find it confusing when market gyrate so much so fast. Looking at the big picture, the move may seem fairly small, but the reality remains that the S&P500 is down 8.47% YTD, and about 12.7% from the peak. Whether this is the dip we should be buying or is this just a tremor before we continue to experience more crashes, remains to be seen.
What is interesting is that Vix has shot up over the month of Feb to 40, and central bankers are already stepping in to calm the markets down showing support and signaling further rate cuts. The bond market is already forcing the Fed’s hand in a sense, by taking the yields further down…close to 1%. Last I checked, the bond market was pricing in 4 rate cuts in 2020!!
On this side of the border, the Bank of Canada may be the first to cut rates, with a decision due early this week. We’ll see how things progress over the coming days.
Outlook for March 2020
My portfolio took a beating like everyone else’s. My portfolio dropped 8.9% compared to the 12.7% in S&P500, thanks to a diversified portfolio consisting of global equities, bonds and gold.
I continued my cleanup over the course of Feb shedding a couple of weak names and adding to more stronger names in my portfolio. And I expect this to continue over the course of March and further in 2020. I am also keeping a close eye on a couple of new companies that I want to add to my portfolio — but still haven’t decided if it makes the right fit with the rest of my holdings. Stay tuned for more info on this front.
I am also fairly fully invested with my current cash position just hovering around 5%. If the correction continues and we get to a bear market, I intend to sell my bond portfolio of the portfolio to fund buying cheaper stocks.
One other major change on this blog in 2020 is that I intend to share my position sizing in percentage terms of my holdings. I have been considering it for a while, but shied away from disclosing too much information online. I believe that sharing this can be valuable both for myself as a feedback mechanism and others who are looking for such information.
Portfolio as of Mar 1 2020:
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What are your thoughts on the points mentioned above? Do you have any specific thoughts on the markets and looking at anything interesting? Share with a comment below.
Full Disclosure: Our full list of holdings is available here.