In another thread someone mentioned moving to “value” in a recession. I will
point out that my biggest losses in 2008 were in individual stocks. These were: a major conservative insurance company (100 percent loss) and an electric utility (100 percent loss).
The MBA geniuses running most of the old line companies are not building anything, they are fighting a rear guard action of descending into dissolution.
On the other hand, the companies that we are invested in are building businesses that do stuff and they are building into relevance.
The old “value” companies are doing “deferred maintenance” (AT&T) “financial engineering” (GE) and “working with customers” (Boeing)
They are borrowing not only cash on the bond market, they are borrowing from deferred maintenance, future economic growth and from engineering knowledge.
The leverage that they are carrying is immense. But because they do not show up on the balance sheets these “value” companies are simply black holes that will suck your wealth into them.
Personally, my “Saul port” is carrying a lot of cash. This is the position that I am comfortable with. To push it more would leave me more vulnerable to my own emotional by and sell actions. The rest of my portfolios are now mostly bonds or cash with an ever diminishing amount in equity ETF’s.
I am actually more comfortable with the “Saul” port than the market ETF and only some odd 401k rules have me invested there at all.