It’s a stock-picker’s market right now.

All major averages declined for the week, with the S&P 500 closing down 1.27% and Nasdaq 3.86%. The Dow dipped 0.28% week-to-date, hitting back-to-back weekly declines.

However, I’m up again for the second week in a row:

Portfolio vs. S&P 500

It’s been a truly fascinating couple of weeks as I’ve watched the market slowly bleed off only to see my portfolio have 2 of the best weeks its ever had, thanks to some careful stock picking. As discussed in this post, I started buying a couple weeks ago in some carefully chosen sectors, mainly healthcare, consumer staples, utilities, real estate and energy.

One of the best performers has been consumer staples:

Consumer Staples

I had positions in $KO, $WMT, and $COST. YTD the sector is up over 2%. We’ve seen a nice break and hold above the previous ATH and so I’ve taken profits and trimmed right back for now. I remain very bullish for this sector and will definitely get back in on a consolidation/ pull-back.

Healthcare has also done very well:

Healthcare

Very similar to staples with another strong break above the previous ATH. The sector is up over 1% on the year and looks set to continue. I continue to hold positions in $LLY and $JNJ.

Utilities:

Utilities

One of the strongest sectors this year so far with a nearly 8% return YTD. I hold a single position in $DUK and will look to add more stocks over the coming weeks.

Real Estate:

Real Estate

YTD, this sector is actually down nearly 4% but with a continuing supply shortage and increased demand, I expect this sector to do well, at least over the shorter term, and to make new ATH’s. Having said that, it’s the sector I have the least confidence in, due to increasing mortgage rates, and so I only hold a small position in $PLD.

Energy:

Energy

With a YTD gain of over 40%, it’s the sector that I’m most bullish on by far. After a period of consolidation just below, we had a nice break & close above that 77 handle in XLE which was my signal to get long. I bought stock in $XOM, $CVX & $OXY. Over the longer term, perhaps by the end of this year if not sooner, I fully expect this sector to be taking out the ATHs from 2014.

Other sectors:

Materials

The materials sector looks bullish to me, both technically and fundamentally. If we start to approach new highs, I will be looking to buy into this sector. One to keep and eye on.

All the rest.

I have a very tiny tech position in $AAPL and that’s it. QQQ, the NASDAQ proxy ETF, is down over 10% this year so far and with the sell-off in treasuries showing no sign of abating, I think there’s more pain to come for this sector. It’s definitely one to avoid for now.

There’s really nothing else that I can get excited about right now. All other sectors are either in decline or treading water.

Managaing Risk

The VIX is stubbornly back above the 20 handle, not by much, but enough to keep me from committing too much of my portfolio to the market. I currently have ~10% portfolio value exposure which is more than enough to do well should the above sectors continue to outperform the rest of the market, yet small enough to do minimal damage should we see a strong sell-off.

If and when the VIX starts falling again, I will be more than happy to increase my exposure but not before.

I hope you found this useful.

As ever, plan for the worst and hope for the best.

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Commenting on the world as I see it — markets, philosophy, investing and more. https://thebusymind.substack.com/

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The Busy Mind

The Busy Mind

Commenting on the world as I see it — markets, philosophy, investing and more. https://thebusymind.substack.com/

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