The Fred Report – Bucket List Update

Timing and Weighting Methodology:  

The “Bucket List” portfolio is designed to take the overall sections of The FRED Report weekly report and list some ideas advisors can use by category. We will have 5 categories: Stocks, Fixed Income, Commodities, International, and Chart of Interest or Areas of Interest.  In the chart of interest section we normally provide a quick review of something interesting. The portfolio model will translate Chart of Interest into an “Areas of Interest” section, which we can use to add weight to one of the other sections, or cash equivalents or something new and different. We will have a maximum of 25 units in this portfolio, allocating 5 units to each category. In the event that we do not have five separate and discrete units in a section, we will take that cash and add it equally to the remainder in that section.

07/19/19 Comments:  Commodities: We will remove INDY from Areas of Interest and add PXH (Invesco FTSE RAFI Emerging Markets). INDY has done well for us, but PXH probably has more potential now. We want more broad-based exposure to Emerging Markets.

portfolio_bucketlist_update 

     

   

 

 

Past Comments:

07/05/19 Comments:  Commodities: We will SELL one GLD and BUY one DBC.  Also, please note, when UGA was added on 11/2/18, there was an additional stipulation. “Commodities: We will SELL one DBC and BUY one UGA. Per our normal practice with Energy we will use a stop loss to move back to DBC on seasonal energy trades. This will be 20% from the entry.” That stop loss was hit on 12/18/18. UGA was stopped at 23.57 intraday (at a 20% loss), and DBC was bought to replace it in the portfolio at the close at 14.76.

11/02/18 Comments:  Stocks: We will SELL SPLV and BUY a trading unit of RSP. This is a core holding, but a trading position into yearend is in line with our forecast. This gives us two RSP.  Fixed Income: No changes. Commodities: We will SELL one DBC and BUY one UGA. Per our normal practice with Energy we will use a stop loss to move back to DBC on seasonal energy trades. This will be 20% from the entry.  International: No Changes. Areas of Interest: We will SELL PIE and BUY INDY. For an Emerging Market position, INDY is a better chart.

07/27/18 Comments:  Stocks: We will sell SPY and buy SPLV, moving us back a bit toward low volatility. There is some risk of correction in August if we make new highs and SPLV is doing well in any event.  Fixed Income: No changes. Commodities: No changes. International: We will sell DXJ and buy EWS. Areas of Interest: We will leave SLX for now but may downgrade that later.

03/26/18 Comments:  Stocks: We will SELL XMLV and BUY MDY, moving us away from low volatility. We will SELL SPLV and BUY SPY, as we believe the corrective action is over for a while. We believe that February was the down month in the first quarter. These serve to reverse positions taken at the end of January 2018.  Fixed Income: No changes. Commodities: No changes. International: We will SELL IDLV and BUY SMEZ, a more aggressive choice. Areas of Interest: We will SELL EELV and BUY PIE. We will SELL UUP and BUY IGF. This emphasizes Infrastructure in this model.

01/19/18 Comments:  Stocks: We will SELL PDP and BUY SPLV, preparing for corrective action. We expect one down month in the first quarter. These serve to reverse positions taken at the end of August 2017. We will SELL DWAS and BUY XMLV, moving us up the capitalization range and also moving to low volatility.  Fixed Income: No changes. Commodities: We will SELL one DBC and BUY GLD, gold looks to have made a cycle low. Frankly we screwed this up, as this reverses our August move. We should have done this earlier – we forecast the low price in gold but did not move on the portfolio. International: We will SELL EWC and BUY IPKW, a more aggressive choice. Areas of Interest: We will SELL PRN and BUY XLI. This keeps us in Industrials while moving defensively into large cap. We will SELL INDY and BUY EELV.  OTHER NOTES: We will hold the dollar for now, as it looks like a bounce, but it has gone the wrong direction for us so far.

08/31/17 Comments:  Stocks: We will SELL XSLV and BUY DWAS. If this is the start of a strong second half move we want to be in high relative strength small cap.  Fixed Income: No changes. Commodities: DBC is our “place holder”. It trades mostly in line with the Benchmark. We will SELL one UGA and BUY one DBC. We think there can be an oil rally in the second half but UGA is enough ahead of this on news, to sell it and possibly buy back cheaper. Or we may switch to another oil ETF later. We will also SELL GLD and BUY one DBC. GLD is in resistance and has hit trading targets for the year. Remember you cannot have a long-term gain in GLD (Taxed as a “collectable”) so there is not point holding on for a long-term gain. Check the tax status of accounts to be sure GLD recommendation is right for you. The FRED Report does NOT give tax advice. We will revisit commodities over the next few weeks. International: No Change. Areas of Interest: No Change.

06/22/17 Comments:  Commodities: DBC is our “place holder.” It trades mostly in line with the Benchmark. We continue to hold some of this, but will SELL one DBC and BUY one UGA. We think there can be an oil rally in the second half and UGA is generally the best way to trade this.  International: We will sell SCJ, and BUY DXJ as the dollar looks to rally in the second part of 2017.Areas of Interest: We Sell PXH and Buy INDY. Emerging Markets could react to a stronger dollar. India is the most attractive Emerging market and we want a position in EM. This also removes Latin American exposure and Brazil looks weak.   Because of the stronger dollar we SELL FXF and BUY UUP also. FXF is a hedge against European problems and the likelihood of these is much less. FXF is not a bad chart but UUP has more potential, in our view.

04/19/17 Comments:  Stocks: We will SELL SPLV and BUY PDP. We are looking for a rally in the second part of 2017, and believe the momentum factor will do better as the market starts to trend.  International: We will sell EWGS, and BUY IDLV to lower the volatility in advance of the French Elections. Possibly being too cautious but EWGS is overbought.

01/26/17 Comments:  Fixed Income: Remove EMLC and add PCEF.  PCEF, while not strictly a bond ETF, is an income vehicle with a god chart. It is in line with our view that creating income for clients will require a “cocktail strategy” going forward, rather than straight bond investing. CWB is in line with this also.  International: Remove HEDJ and add SCJ.  The Euro looks to have made a bottom vs. the dollar, along with the Yen. So, we are satisfied with our remaining European exposure and want to add Japan.

12/01/16 Comments:  Stocks: We will SELL SPY and BUY DIA. This gives more Industrials and Financials exposure.  Commodities: We Will SELL IAU and ADD DBB. Again, DBB is an infrastructure play and precious metals are weak. We are keeping GLD for a rebound.  Areas of Interest: We will SELL SLV and BUY PRN. Long-term, metals may be ok but Industrials looks stronger.

08/25/16 Comments:  Stocks: We will SELL XMLV and BUY XSLV.  Fixed Income: We will SELL PCY and BUY EMLC. Areas of Interest: We will SELL KOL and BUY SLX.


06/13/16 Comments:  From 06/13/16 Weekly Report: We will look at the soft commodities today, and take this opportunity to REMOVE NIB FROM THE COMMODITIES BUCKET. WE ADD IAU TO REPLACE IT. DO THIS ON THE OPEN.


05/25/16 Comments:  Stocks: No changes.  Areas of Interest: We will use our cash to buy SLV.   Commodities: No changes.  International: No changes.  Fixed Income: No changes.

03/01/16 Comments:  Stocks: We will sell MDY and Buy SPHD for defensive purposes. Areas of Interest: No change – remember we sold DXJ and added CASH on February 10th. Commodities: We will sell BAL and buy NIB as NIB is at the bottom of a range. International: No changes. Fixed Income: No changes.

02/10/16 Comments:  Areas of Interest: Rather than issue a special portfolio report just to remove DXJ from our models, we will take this opportunity to remove it from our “Items of Interest” Portfolio and replace it with one unit of CASH. Japan is weakening, we think because their zero/negative interest rate is now perceived to be negative instead of the initial positive. We have a profit in this, plus large yearend distributions over the last two years. We may come back to Japan, but likely not in a currency hedged instrument. Those who want to be in Japan should look at SCJ or NKY.

02/03/16 Comments:  Commodities: No Changes. Stocks: We will remove XLF, and add XMLV. We want to add Mid Caps due to oversold conditions in the market, but since this is possibly early will use a low volatility solution. Fixed Income: We will Change PGX for VRP, as this will perform better is a rising rate environment, which we still expect as this current period of turmoil ends. TLT has advanced more than expected, but other Fixed Income ETFs have not followed – suggesting hot money went into TLT and can come out quickly as well. International: No Change. Areas of Interest: We will sell KBWB and add KOL. Financials are acting badly enough here that we want to revisit this at a later time. KOL should benefit as the current Washington crowd rides off into the sunset.

10/02/15 Comments:  Fixed Income: We will sell IEI and add TBF. We have been looking for TLT to test 126 in October, and it has. This may be a bit early but our price has been hit.  Areas of Interest: We will sell EWI and add FXF. We have enough European exposure in the International portfolio. We will take a slight loss here.  Commodities: No changes. Stocks: No changes. International: No changes.

08/28/15 Comments: International: International: We remove 2 GXC’s and add one EWGS and one HEDJ. We were successful in our objective to average China and minimize the loss on this position. When added to the 27% we made on Hong Kong the portfolio has come out ahead.  Commodities: No changes. Stocks: No changes. Fixed Income: No changes.  Areas of Interest: No changes.

08/24/15 Comments: International: We remove IDLV and add GXC. We have had questions as to when to average china or buy China, and we will do this today – it is a trade most likely. Those who want to take a new position should use PGJ as mentioned in the weekly letter. Commodities: No changes. Stocks: No changes. Fixed Income: No changes.  Areas of Interest: No changes.

07/17/15 Comments: Commodities: No Changes. Stocks: We will remove PRFZ and add XLF. We have not used a Sector ETF in a while but this the most promising sector in the market to us right now. Fixed Income: We will remove DSUM and add PGX, as Preferreds are a better chart with more yield and we have concerns given the turmoil in China. International: We remove PIE and add EWL. Switzerland is our favorite international ETF for long-term investors, and should be in our models. Areas of Interest: we will remove XLE, as energy stocks look weak in what should be a strong seasonal period, and add KBWB, as large banks look attractive to us for the second half.

06/05/15 Comments: Commodities: We will sell one DBC and add UGA. Per Seasonal Trading rules we will use a 10% stop loss from today’s closing price, our entry. We advise using a 10% stop from your entry price. This is an intraday stop.

04/10/15 Comments: 
Stocks: We will SELL DVY and BUY MDY. If the market corrects DVY may outperform but MDY has the best accumulation model by far and we want to be in it.  Commodities: We will SELL one DBC and BUY one BAL. Cotton is turning up here. International: We will SELL EWH and BUY GXC. Areas of Interest: We will SELL IDLV and BUY EWI. We will SELL ECON and BUY PXH.

01/21/15 Comments: 
Areas of Interest: We will SELL FXF and BUY XLE.  Commodities: Per our 10% stop rule on Seasonal oil trades (see Weekly Reports of October 13 and October 20): USO was removed at 28.79 on November 25, replaced with one DBC at 21.45.  International: We will SELL EWL and BUY IDLV 

10/13/14 Comments: 
In the Stock Bucket, we have no changes, but stay tuned – if the market gets worse we will make some changes. In the Areas of Interest bucket, we remove EWI and add IDLV. We also remove UUP and add FXF. The Swiss Franc is near long-term support and usually does well during Euro turmoil. In the Bond Bucket, No changes. In the International Bucket we sell EWG and buy EWL, reversing a decision at the beginning of the year. In the Commodities Bucket, we remove one DBC and add one USO to play the seasonal oil trade. 

07/02/14 Comments: 
In the Stock Bucket, we will remove one SPY and add one PRFZ. Our forecast that the economy would be weaker in the first part of 2014 has occurred, and we expect economic improvement in the second part of the year. In the Areas of Interest bucket, we remove RWX and add EWI. The same forces that will benefit RWX will benefit EWI and Italy looks like a better chart, but this is a hard choice. In the Bond Bucket, we will remove PGX and add IEI. This is also a hard choice, but bonds have rallied in the first part of the year per our forecast, and should rates rise in the second part of 2014 IEI should outperform. This is defensive although the yield on the bond bucket will fall. 

01/31/14 Comments: 
We make the following change in the commodities bucket based on our seasonal trade. We remove USO and add one DBC to the commodity bucket. No other Bucket List changes.

01/03/14 Comments:

We will make some portfolio changes for 2014.  In the Stocks Bucket, We REMOVE one SPY, and ADD one RSP. In the Bond Bucket, We REMOVE LQD and ADD DSUM. DSUM is a better chart and the yields are about the same. In the Commodities Bucket, we REMOVE UNG and ADD DBC to take part of our seasonal profit in the Petroleum Complex. In International Bucket, we will REMOVE EWL, and ADD EWG. This is a tough choice but right now Germany looks a bit better than Switzerland intermediate-term. We may change this again mid-year if it does not work as expected.

11/05/13 Comments:

In COMMODITIES we DELETE one DBC and ADD one USO. This is an aggressive change that should position us well for the seasonal rally in oil that normally starts mid November. Realize DBC is approximately 40% oil so this will ratchet up exposure in that area. As mentioned in the Weekly Review, we would add some USO at 34 or below, but become aggressive when the weekly stochastic turns up. We will take a tax loss in IAU, by DELETING IAU and ADDING GLD. We want to maintain a position in gold for now.

10/10/13 Comments:
In BONDS we exchange TIP for CWB. This is an aggressive change that should position us well for 2014, but may be early. We looked at eliminating PGX instead of TIP but like the yield on PGX and see possibility of a rally in Preferreds later in 2013. We still have concerns that ETFs may not be the best way to invest in bonds going forward. In ITEMS OF INTEREST, we take a more aggressive tilt by removing BKLN and adding RWX. Again, this may be early but believe this positions us well for 2014.

08/22/13 Comments:
In INTERNATIONAL: We switch PIN to PIE as India is worse than other Emerging Market charts. In COMMODITIES: We remove the last DBC added and switch this to UNG. The accumulation model on UNG is still weak, but storage reports were fine, and the intermediate chart looks good. This may be early so would add slowly, getting a position by early October. In AREA OF INTEREST we switch FXF to UUP as the dollar looks to be at the bottom of a range.

07/22/13 Comments:
We REMOVE USO from the commodities bucket, and ADD DBC. This is earlier than we normally sell oil but there is Backwardation in this market that could affect the price of USO, which we added back in April in the 31 area. DBC is a basket of commodities, so it will benefit from a rise in oil prices, but is defensive if these currently high prices see some correction.

07/03/13 Comments:

  • Stocks Bucket: We switch PRFZ into SPY. This is in line with our advice to move Small Cap down to a weighting in line with your firms from overweight as we have been.
  • Commodity Bucket: We switch DBA into DBC. This is a conservative choice, but most commodity charts are looking negative, and a stronger dollar will impact all of these.
  • International Bucket: We switch EWA into EWC. Canada is a commodity-oriented bucket market, but is in a more robust part of the world economy. EWC has both energy and gold exposure. Australia does not have oil and is in a worse part of the world.
  • Area of Interest: We switch FXI into ECON. Our forecast of worldwide economic slowing is working, and China is one of the weaker economies. ECON spreads the risk amongst several emerging economies, and should be a better risk – although it remains an aggressive choice.
  • In the Bucket list, we make some switches to acknowledge the risk of an economic slowdown and to start to position for a summer driving rally in Oil. We would add USO slowly (we cannot do this on the list – it is either in or out), with the idea we have a rally from mid to late May, to the end of August.

04/17/13 Comments:

In the Bucket list, we make some switches to acknowledge the risk of an economic slowdown and to start to position for a summer driving rally in Oil. We would add USO slowly (we cannot do this on the list – it is either in or out), with the idea we have a rally from mid to late May, to the end of August.

  • In International, we remove GXG and add PID

  • In Commodities, we remove JJC and add USO

02/12/13 Comments:

  • STOCKS: We remain positive and think this market can hit at least 156 on this run, and possibly more, but we are closer to that number than we were at the beginning of January: We Sell MDY and Buy SPY. It looks like the next surge in price will lead to the deepest correction of this move, to take a slightly more defensive tilt.

  • COMMODITIES: We Sell NIB (Cocoa) and Buy DBA (Agricultural Commodities). DBA is in our target area of 27, and normally bases in the spring, rallies in the summer. We Sell UHN and buy DBC. Oil has had a weaker than average seasonal move, and DBC will broaden out commodity exposure.

  • INTERNATIONAL: We sell EWW and add EWA to tilt towards Asia and away from Latin America.

  • AREAS OF INTEREST: We sell EWJ, buy DXJ as FXY has hit our target area of 105 and may become volatile. 

01/23/13 Comments:

  • We will remove IYZ and add DVY. DVY is a better chart, and also increases the yield on the stock component of the Bucket List

12/28/12 Comments:

  • NIB: Cocoa, as it is underperforming DBC. Cocoa has fairly low seasonal reliability with the only consistent low occurring in December/January. This should trade better into spring.
  • UHN: We are using this rather than USO as Heating Oil is a more direct reflection of the seasonality of oil in winter.