As we move closer to the end of QE2 I am reducing equity exposure to lessen risk. Frankly there is no way to know what will happen, if anything, when The Fed ends printing money and increasing supply. Caution at this point will become paramount and I prefer to be in equities which are very large cap and best of breed. So as noted earlier NYB and FTR will be dropped from trading. (FTR once options trading will allow.) I am also dropping recently added PBI and LLY. Additionally I plan on dropping HCN when options expire in May. Additional exposure will be added to PFF, JNK, and O. All these securites pay monthly dividends and are solid performers going forward. This reduces my number of equity securities from about 25 to 19. The following securities will be put on watch for removal, ARCC and SDRL. Once QE2 is past we will likely move some assets to additional municipal bonds as prices allow.
These moves are not meant to scare anyone. As a trader one must consider situations as this as points where caution is the best approach. If you are a buy and hold long term investor holding positions is still a good approach. The purpose of this posting is to continue to be open about our trading positions moving forward.
I am pleased that comparable hedge fund investors in April actually lost money, so our performance as noted in an earlier post presents evidence we are making correct moves in 2011.
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