Signals for CINF, BEN, CARR, VGT

Today our systems created four signals: three sell signals and one buy signals.

Reduce: Cincinatti Financial Corporation

Based on the sell signal for Cincinatti Financal Corporation (CINF) we reduced our position at an average price per share of USD 71.12. With average unit costs of USD 55.70 this represents a gain of 27.68%, a very good result.

The previous sell signal was on Thursday, 04 June 2020, at a price of USD 64.3017 (see blog post).

We started this position in 2016 and increase and reduced our holding several times since then to make use of good buying and selling opportunities.

Reduce: Franklin Resources

And another sell signal for Franklin Resources (BEN). We already reduced this position somewhat on Friday, 05 June 2020 (see our post), at a price of USD 22.68.

Today we reduced it further at an average price per share of USD 24.2850. With unit costs of about USD 16.46, this means a gain of 47.54%. This is quite satisfactory.

This position was started in 2016. We added and reduced this position several times to seize good opportunities.

Reduce: Carrier Global Corporation

Carrier Global Corporation (CARR) has seen several sell signals recently (see our blog posts here, here and here). We started this position in April 2020 and increased several times in that month. In May our systems started to created sell signals, so we reduce our position several times.

Today we sold at an average price per share of USD 24.2850. With unit costs of USD 13.32 we realized a gain of 82.32%, which is a very satisfactory result.

Add: Vanguard Information Tech ETF

To increase our exposure to the technology sector we started the position in Vanguard Information Tech EFT (VGT) earlier this month. Today we added at an average price of USD 271.96.

Like all other holdings mentioned in this post, we see VGT as a long-term investment, although we may choose to follow our system's signals to increase or decrease respectively.

Disclaimer

Past results have no bearing for future results. Keep in mind that we do not accept any responsibility for your investment decisions. Do your own research and due diligence and consult with your financial advisor before making decisions. Any investment vehicle mentioned on this site is used for illustration purposes only and does not constitute investment advice.

A Busy Day: EMR, XOM, OTIS, LEG, AMCR, VGT, AOS, BEN

Triggered by the positive numbers from the US job market, the US stock markets are up today. The S&P 500 gained 2.62%. The US job market reported 2.5 million new jobs in May, the most jobs added in a single month since 1948. The unemployment rate dropped from 14.7% in April to 13.3% in May. Analysts expected an unemployment rate of up to 18%.

Our systems tend to create more signals when there are larger market moves (up or down) compared to when things remain mostly unchanged. Today was no difference with 8 signals, one buy and 7 sell signals.

Here is the rundown.

Reduce: Emerson Electric

We started our position of Emerson Electric (EMR) in 2016. Since March we reduced our holding slightly at various price point.

Today we sold at an average price of USD 67.17 per share. With unit costs at USD 57.08 this reprsents a gain of 17.68%. Not earth shattering but still a good result.

Reduce: Exxon Mobil

Oil companies have been unders pressure for along time. Exxon Mobil (XOM) is no different. We've held this position since 2018. We increased our position in 2019. Just a few days after the lowpoint at end of March we added even more shares at an average price of USD 37.05.

While the overall position still carries an unrealized loss, our systems have created a couple sell signals in April at USD 39.97 and USD 43.47. Today's sell was at an average price of USD 52.72. Compared to the low point in March this is a gain of 42.29%.

Basically with this holding the play was buying when nobody liked the stock, then slowly sell the shares acquired at the low point as the stock price increases again. Without closing this position our systems help realizing a gain by seizing the opportunity to get additional shares at a steep discount.

XOM is not out the woods yet. The company has postponed the increase of their quarterly dividend, which should have happend in the current quarter. To keep their status as dividend aristocrat they will have to increase their dividend that is payable in the fourth calendar quarter of 2020, and if that increase is just a fraction of a cent.

There are indications that business for oil companies will improve again over the next few months. As the economies around the world start to come out of the coronavirus hibernation, demand for oil is likely to increase again. The oil price has recovered from its ridiculous low of minus USD 40 (!). Output of existing wells is being reduced, e.g. the number of oil rigs in the US is dropping.

As business improves again, the stock prices of oil companies should continue to increase as well. Today XOM advanced by 8.11% and Chevron (CVX) was up by 4.71%. Obviously this is just a single day, so is not indicative by any stretch of imagination. On the other hand, XOM is up by over 40% since its low point in March 2020.

Reduce: Otis Worldwide Corporation

Our position started when Otis Worldwide Corporation (OTIS) was spun off from what is now called Raytheon Technologies (RTX), formerly United Technologies (UTX). We increased our position since then several times. Today was the first time our systems produced a sell signal.

We reduced our position at an average price of USD 58.14. With average unit costs of USD 46.0305 this represents a gain of 26.31%. This is a very good results for two months.

Reduce: Leggett & Platt Inc

And yet another sell signal for Leggett & Platt (LEG). Just a day ago there was a sell signal at USD 35.57 (see our post).

This time the sell signal for LEG was at USD 37.04. With average unit costs of USD 28.52 this represents a gain of 29.87%. This is a very good result.

Reduce: Amcor Plc

Amcor Plc (AMCR) increased in price further, so our systems determined that it is time to reduce again. The previous sell signal was generated only two days ago (see our post).

This time we reduced our position at an average price of USD 10.87. With unit costs of USD 7.40 this is a gain of 46.89%. A very good result, given we started this position in March 2020 only.

Add: Vanguard Information Tech ETF

Another buy signal for Vanguard Information Tech ETF (VGT). We've previously provided more details about the rationale for having this position in our US portfolio (see out post).

Today we increased our position with at an average price of USD 269.65.

Reduce: A.O. Smith Corp

For A.O. Smith Corp (AOS) our systems created a sell signal. We have held this position since July 2019 and added more shortly after.

Today we reduced the position at an average price of USD 52.03. With unit costs of USD 46.34 this represents a gain of 12.28%.

Reduce: Franklin Resources

We started this position in 2016. Performance in terms of stock price was disappointing so far. However, the company continued to increase their dividend each year. Dividend yield is currently at about 4.67%.

In April 2020 our system created a couple of buy signals. We increased our holdings accordingly. Our algorithms took the opportunity to buy near the bottom.

With today's sell signal we reduced our position at an average price of USD 22.68. With average unit costs of USD 16.46 we realized a gain of 37.79%. A quite satisfactory result for just 1.5 months.

Summary

It was a comparably busy day for us. However, we are confident that today's transactions were the right thing to do based on the signals generated by our system.

All of the stocks mentioned in this posts are long-term positions in our portfolio, i.e. a minimum period of 10 years. However, based on recommendations of our algorithms we may choose to increase or decrease any of the positions in the future.

Comparing our portfolio, which is managed by our software, with the S&P 500 index shows that our portfolio is up by 0.20% year-to-date while the S&P 500 index is down -1.14%. In other words, year-to-date our portfolio outperformed the index by 1.34%.

Disclaimer

Past results have no bearing for future results. Keep in mind that we do not accept any responsibility for your investment decisions. Do your own research and due diligence and consult with your financial advisor before making decisions. Any investment vehicle mentioned on this site is used for illustration purposes only and does not constitute investment advice.

Results Dec 2019: -0.39% Active Return vs S&P 500

US Portfolio Performance

Because Dec 2019 saw a weak market, the yearly returns for the 12 months ending 31 December 2019 are somewhat misleading. Nevertheless, for our US portfolio we now have data for 3 years since we decided to share our experiences with investing in US equities.

We didn't quite achieve the same return for the twelve months ending 31 Dec 2019, falling short by -0.39% compared to the S&P 500. However, a gain of 28.49% is still impressive in our view.

Looking at the performance over two and three years, the results are quite satisfactory, too: +10.59% per year since 31 Dec 2017 and +14.81% per year since 31 Dec 2016. All of these numbers are after taxes and fees. The following table summarizes these results:

	1 year	2 years	3 years
Optarix US	+28.49%	+10.59%	+14.81%
S&P 500	+28.88%	+9.93%	+13.00%
Optarix US Active Return	-0.39%	+0.66%	+1.81%

Values are annualized for periods longer than 1 year.

Here are the updated graphs for both the active return over 1 year periods as well as the information ratio of the Optarix US Portfolio against the S&P 500, both for the time from December 2018 to December 2019.

Please note that past performance is no guarantee for future performance.

In Other Developments

With the killing of an Iranian general in Iraq by a US-american drone, tension in the middle east have increased. Although at the moment it appears that both sides try to dial back their threats and responses, there is no gurantee this conflict is over yet.

Meanwhile the Brexit, the trade wars and the reduced economic outlook for many economies and the world as a whole will keep a lid on markets. We believe it is very unlikely that 2020 will see returns similar to 2019. Later this year, we'll also start seeing the influence of pools and election results in the United States.

At least the Brexit has become a bit clearer. The United Kingdom will leave the US by end of January 2020. Then a transition phase starts that is scheduled to end 31 December 2020. It remains an open question if both sides, the EU and the UK, will be able to negotiate a free trade agreement by then. As this matter evolves, its impact on financial markets may increase again.

Changes in our Portfolio

In December we reduced our position in Microsoft (MSFT). We increased our positions in Franklin Resources (BEN), Federal Real Estate (FRT), Automatic Data Processing (ADP), Wallgreens Boots Alliance (WBA) and Aflac (AFL).

Suggestions for Your Own Portfolio

Generally we suggest an equal weight portfolio. That means that all your positions have roughly they same market value. Obviously this changes over time as some positions go up in value and some may go down. If that happens rebalance by buying/selling to get each position back to their average.

Increase

With this idea in mind, here are some suggestions for companies for your consideration to add to your portfolio. These are all dividend aristocrats. As of writing the look more attractively priced than the average.

1. Cardinal Health (CAH)
2. Franklin Resources (BEN)
3. People's United Financial Inc (PBCT)
4. AT&T Inc (T)
5. Wallgreens Boots Alliance (WBA)

Decrease

Equally, if you have a position of one of the following and that position is above average in your portfolio, we suggest considering reducing them. Relative to all S&P 500 dividend aristocrats they are a bit more ambitously priced at the moment.

1. Becton Dickinson and Company (BDX)
2. The Sherwin-Williams Company (SHW)
3. Abbott Laboratories (ABT)
4. Brown-Forman Class B (BF.B)
5. S&P Global (SPGI)

As always, while we can make suggestions to consider, we cannot accept any responsibility for your investment decisions. We strongly recommend that you do your own due diligence, buy only what you understand, buy only what fits your individual objectives and circumstances, and in particular that you seek professional advice from your investment advisor.

Disclosure

We hold positions in all of the companies mentioned in this post. We also intend to add to our position in CVX in the next 3 trading days. We have no intentions to change any of our other positions.

Today's Rebalancing: Apple (AAPL)

Today we decided to reduce our position in Apple (AAPL) to some degree. Originally we started this position in July 2015 at a price of USD 125.00 per share.

Today we sold shares at a price of USD 299.40 per share. This represents a gain of 139%. This is a quite satisfactory result.

The proceeds are intended to increase other positions in our portfolio next week. At present candidates are Walmart (WMT), Franklin Resources (BEN) or A.O. Smith (AOS). Typically, the final decision is made on the day.


Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Results Nov 2019: +1.88% Active Return vs S&P 500

US Portfolio Performance

Another good month for our Optarix US portfolio. Our objective is a result that is roughly in line with the S&P 500, doing +1.88% better than the index over the last 12 month and 1.39% better each each over the trailing 2 years is quite satisfactory.

Looking at the performance of our own Optarix US Portfolio as of 30 Nov 2019, the results are quite satisfactory, too: +15.68% for 12 months and 10.31% annually for the last 2 years. All of these is after taxes and fees.

	1 year	2 years
S&P 500	+13.80%	+8.92%
Optarix US Portfolio	+15.68%	+10.31%
Optarix Active Return	+1.88%	+1.39%

Values in this table are annualized for periods of over one year.

Here are updated graphs for both the active return over 1 year periods as well as the information ratio of the Optarix US Portfolio against the S&P 500, both for the time from November 2018 to November 2019.

Please note that past performance is no guarantee for future performance.

Other Developments

Since the last block post we have also completed our goal to add posiitions for all dividend aristocrats in the S&P 500 to our portfolio. The dividend aristocrats, i.e. companies that have increased their dividend each year for at least 25 consecutive years, represent our base investment.

In addition we have a small selection of investments in the hightech sector. Examples are companies such as Microsoft (MSFT) or Atlassian (TEAM). We select these companies based on our opinion about their business model, their growth perspectives, their profitablity and - where present - a history of increasing their dividends from when they started to pay dividends.

Over the last few months the trade wars and the looming Brexit were topics that we think influenced the markets. Surprisingly despite the trade tensions, the economies in the US has been astonishingly robust. The Federal Reserve has cut the rates this year and believes that for now they are in an observing position. If needed, however, they will act when and as appropriate.

The ECB is keeping interest rates low as well. They have also restarting their bond buying program, pumping even more liquidity into the markets. Interest rates for German Bunds remain negative and it doesn't appear as if they move into positive territory any time soon.

At the time of writing the newly elected parliament in the UK has approved Boris Johnson's Brexit deal. The plan is that the UK will leave the EU at 31 January 2020. For the relationships after the Brexit the UK wants to negotiate an agreement with the EU by December 2020. We believe this timeframe is very ambitious looking at past examples of trade agreements. In all cases the upside is that finally there is clarity: The UK will leave the EU, with or without an agreement.

In the US two articles of impeachment against President Donald Trump have been approved by the House of Representatives. However, they have not been passed on to the Senate. We believe that unless something material changes, the impeachment will struck down in the Senate by the republican majority. We also believe that for the time being the impeachment will have little impact on the financial markets.

It terms of US politics we think it will be more interesting to follow reliable polls after the democratic challenger has been determined and as both large parties prepare for the elections at the end of 2020. We think the result of those polls is likely to have a bigger impact on the markets in particular if they are tight, i.e. within the margin of error, or inconclusive.

Portfolio Changes

In November we increased our positions in Colgate-Palmolive (CL), Ecolab (ECL), Mc Donald's (MCD) and McCormick (MKC).

Suggestions For Your Portfolio

Generally we suggest an equal weight portfolio. That means that all your positions have roughly they same market value. Obviously this changes over time as some positions go up in value and some may go down. If that happens rebalance by buying/selling to get each position back to their average.

Increase

With this idea in mind, here are some suggestions for companies for your consideration to add to your portfolio. These are all dividend aristocrats. As of writing the look more attractively priced than the average.

1. People's United Financial Inc (PBCT)
2. Franklin Resources (BEN)
3. AT&T Inc (T)
4. Chevron Corporation (CVX)
5. Wallgreens Boots Alliance (WBA)

Decrease

Equally, if you have a position of one of the following and that position is above average in your portfolio, we suggest considering reducing them. Relative to all S&P 500 dividend aristocrats they are a bit more ambitously priced at the moment.

1. The Sherwin-Williams Company (SHW)
2. Becton Dickinson and Company (BDX)
3. Brown-Forman Class B (BF.B)
4. Abbott Laboratories (ABT)
5. Ecolab Inc. (ECL)

As always, while we can make suggestions to consider, we cannot accept any responsibility for your investment decisions. We strongly recommend that you do your own due diligence, buy only what you understand, buy only what fits your individual objectives and circumstances, and in particular that you seek professional advice from your investment advisor.

Disclosure

We hold positions in all of the companies mentioned in this post. We also intend to add to our position in WBA in the next 3 trading days. We have no intentions to change any of our other positions.

Shopping List March 2019 (Beta)

As an experiment, we want to provide on a monthly basis a list of dividend aristocrats from the S&P 500, that we believe are more attractive in relative terms than all other dividend aristocrats. At Optarix we call this list our "shopping list". To determine what goes on the list we are using a combination of price/earning ratio (P/E ratio) and dividend yield that is then translated into a score.

The list for March 2019 looks as follows:

Rank	Name	Ticker	Price (USD)	P/E ratio	Yield
1	AT&T Inc.	T	30.67	8.713	6.74%
2	AbbVie Inc.	ABBV	81.34	10.283	5.35%
3	Cardinal Health Inc	CAH	50.27	10.473	3.75%
4	People’s United Financial Inc	PBCT	17.36	13.252	4.01%
5	Exxon Mobil Corporation	XOM	80.15	16.094	4.08%
6	Franklin Resources Inc.	BEN	33.32	10.413	3.20%
7	Chevron Corporation	CVX	125.31	15.963	3.82%

As a reference: As of writing the S&P 500 (SPX) stands at 2,822.48 and the S&P 500 Dividend Aristocrats stands at 1,187.79.

The intention is to publish our shopping list on a regular basis and then revisit the list in the future.

How To Use The Shopping List
At Optarix we use this shopping list to compile a shortlist of positions we consider adding or increasing in our portfolio. At present we have shares in all of the above except for People's United Financial and Chevron. So we may choose to add these or we may choose to increase our positions in any of the other five over the next five months.

If you wish, you could use this list in different ways:

1. To start a portfolio, invest an equal amount in each of these seven stocks
2. If you have a diversified portfolio already, you can use this list to pick one or several to your portfolio
3. If you have all of them in your portfolio already, then you could consider adding to one or several of these seven positions in your portfolio

Please note that there are several other factors that you may want to consider.

If you choose to start a new position, buy the stock only with an intention to keep them for at least 10 years. At Optarix our preferred holding period is "indefinitely".

The stocks in the shopping list are attractive on our view relative to the other dividend aristocrats in the S&P 500. We cannot say - in fact nobody can - how these stocks will perform in the future, relatively or absolutely. In particular we cannot make any predictions for these stocks as a group or for any of these individual stocks.

We believe, though, that all dividend aristocrats as a group represent a good, long-term investment and should see satisfactory average yearly returns over the next 10 years and beyond. "average yearly returns" means for any give year we may even see a negative return, e.g. the stock market may decrease a large percentage. Keep in mind that in the first decade of the century, the S&P 500 was down by over 60% year-on-year at a point.

You need to do your own due diligence. This post is not investment advice. If you choose to use the information in this post for inspiration and then go on doing more research on your own, then great! The stocks in the shopping list are a great fit for some portfolios. But they can be very bad choices for other portfolios, e.g. in terms of risk exposure to specific markets, industries, currencies, etc. or in terms of your investment goals and many more factors like these.

For the Optarix US portfolio we are considering to start new positions in either People's United Financal (PBCT) or Chevron (CVX) or both in the future. We may also choose to add to our positions that we hold in the other five stocks in the list.

Happy Investing!

Disclosure: We have positions in T, ABBV, CAH, XOM and BEN. We have no plans to initiate new or change existing positions in the next 48 hours.