Just Me Thinking Aloud

Maybe it’s because the calender has signaled that ‘Summer’ has officially begun. Or maybe it’s because the past month’s market action has been such a downer. But stocks are up a bit this morning for reasons I don’t really understand. There isn’t anything of substance that one could call “good news”. Instead, we’re in an inflationary/stagflationary recession and likely headed for a depression. So it’s time to do some portfolio review and to maybe get defensive.

If one borrows Ben Graham’s three terms --Defensive, Enterprising, Speculative-- and assigns bond ratings to them, the following schedule emerges:

**Defensive     (AAA-AA)**
**Enterprising  (A-BBB)**
**Speculative   (BB and lower)**  

No portfolio doesn’t carry a bit of cash, and not every investment works out well. So let’s add two more categories to that schedule.

Cash & Equivalents

Next comes the tricky part, assigning weightings to those five categories according to one’s own specific means, needs, interests, skills, goals, and objectives. These are the weightings I favor compared to what one of my portfolios actually looks like, my margin account at ET that hold only bonds .

**Targets: 				Actual:**

**Cash & Equivalents   0%                 Cash & Equivalents  7.6%**
**Defensive           50%                 Defensive          52.2%** 
**Enterprising        33%                 Enterprising       28.6%**
**Speculative         17%                 Speculative        11.3%**
**Non-performing       0%                 Non-preforming      0.4%**  

Here are some concrete, actually held examples of each of my categories (which needn’t be --and probably won’t be-- the same as yours).

**Cash equivalent?           a 13-wk T-Bill.** 
**Defensive?                 Tigard OR Water Sys 5's of '31.**
**Enterprising?              Prospect Cap's 6-3/8's of '25.** 
**Speculative?               Tilray's 5's of '23 convert.** 
**Non-performing?            Venezuela's 9.25's of '27** 

My takeaway is this (with respect to this specific portfolio). Due to rising interest-rates, I’m getting clobbered on the prices of my bonds, as should be understood and expected. But as long as they continue to perform, I’ll make the money from them that I expected to make, and I don’t need to do anything. As to what I bet on Venezuela, my basis is tiny and just the cost of doing business.

So, just six more portfolios to grind through, some of which hold quite a few preferreds and ETFs, though not many stocks.