Author: Jonathan Wee
Covestor model: Macroeconomic and Secular Trends
This past August was one of the most dull trading months in recent history. With the S&P moving through a narrow range, stocks felt like they were waiting for a train that never arrived. During boring times like these, small and steady victories can help keep you motivated and focused on future events.
Sometimes it’s good to be boring. High yielding investments pay you to wait for market volatility to die down. In this case, there was a lack of volatility, but holding onto these “turtle” stocks means you still beat the hare.
My portfolio holding Terra Nitrogen (TNH) declared a cash distribution of $4.21 in mid-August with an upper 7% yield. REITs have also been performing well this year, with little changes planned for interest rates. American Capital Agency Corp. (AGNC) has run up over 20% year-to-date while maintaining a high yield. Finally, dividend reinvestment plans or DRIPs can help maximize the benefit of receiving these payouts.
Boring can also be bad. For high-flying growth stocks, one slap with a boring tag can dramatically bring down the price. In the case of portfolio holding Chipotle Mexican Grill (CMG), it has already shown some signs of slowing this year. The second location for its new Shophouse Asian Kitchen chain is set to open in the coming months and it better get consumers excited about eating out once again.
Our holding Apple (AAPL) is set to reveal some new devices this month, but if they end up being dull, it could make quite a dent on the stock.
I’m sad to see the summertime go, but September already looks more exciting.