Adding To The Portfolio
Mother's Little Helper portfolio was UP today +$818.47 (+0.69%).
Overall GAIN YTD: +417.83 (+0.35%).
Our benchmark index, the S&P 500 is DOWN -0.25%
“Agriculture is our wisest pursuit,
because it will in the end contribute most to real wealth, good morals & happiness.”
– Thomas Jefferson
I made my buys for the year on December 28, 2017, see the new portfolio here (Click Here).
Today's Big Move
Today I made the decision to add to the portfolio. This market has shifted up on us several times this year and its only April. In a previous post I commented on my belief that commodities are going to be the big investment theme for the next several years. I was waiting for earnings to come in before making the call, but given the huge beats from most of the corporate earnings that have come in so far I think its prudent to get our buys in before Exxon-Mobil and Chevron report tomorrow.
When we talk about commodities most people think I'm talking just about oil and gas, Yes but wrong. Oil is the most important commodity that humans use so its overweight in any commodities portfolio. However, the word runs on corn, lumber, cattle, wheat and many more commodities. Even if the whole world stops buying Apple iPhones I can guarantee you that the whole world will still want corn.
The XOP 5%
Oil inventories are showing a marked decline and investments in capital equipment and exploration are way down too. Those two factors suggest to me that we should start to see big investments in oil and gas exploration. Keeping with our theme of buying low cost index funds I took a position in the SPDR® S&P Oil & Gas Exploration & Production ETF (XOP). This fund is now 5% of the total portfolio and it's investments are focused on the oil and gas exploration side of the energy sector. The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index derived from the oil and gas exploration and production segment of a U.S. total market composite index. In seeking to track the performance of the S&P Oil & Gas Exploration & Production Select Industry Index, the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index represents the oil and gas exploration and production segment of the S&P Total Market Index ("S&P TMI"). The fund is non-diversified.
To get coverage for the rest of the commodities market I've selected the PowerShares DB Commodity Index Tracking Fund (DBC). While the DBC does include significant holdings in oil and gas commodities, these are in futures contracts for the actual commodities. This is a unique fund in that it protects against a condition known as 'contango' by investing in US Treasury bills as a hedge. The investment seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Diversified Commodity Index Excess Return™. The fund pursues its investment objective by investing in a portfolio of exchange-traded futures on Light Sweet Crude Oil (WTI), Heating Oil, RBOB Gasoline, Natural Gas, Brent Crude, Gold, Silver, Aluminum, Zinc, Copper Grade A, Corn, Wheat, Soybeans, and Sugar. The index is composed of notional amounts of each of these commodities.
Disclosure: I am personally invested long in some or all of these funds that appear in the Mother's Little Helper portfolio or manage these investments for my Mother's portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the MLH portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. Since I may on occasion discuss Bitcoin and other cryto currencies I disclose here that I personally own investments in the cryto-currencies listed here: DBC, VTI, VWO, VEA, VIG, XLE, MUB, TBT, GLD, Bitcoin, LiteCoin
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.