I believe investors should be focused on longer term trends.  Short term stuff can be exciting and is more conducive to cocktail party talk, but the long term is where it's at for investing.  The talking heads on tv are mostly focused on short term because it sells ads and is exciting.

I look at my own investing and largely I try to end up with companies that I don't have to look at too much.  Ideally, I would never sell.  Good companies grow over time, keep pace with inflation and pay their owners with a combination of dividends and asset growth.  Unfortunately, I have a weakness against volatility.  The problem with buying companies and then never selling is that one would be subject to high volatility.  And so, I hedge.  This costs me money over time and I understand that.  I hedge by selling things that appear to have stretched valuations or by selling the indexes.  I am trying to resist the urge to sell my individual stocks and here is why:


My current weights:
sector                    weighting bmark over(under)weight
consumer-cyc 3.7% 4.5% -0.8%
consumer non cyc 11.6% 5.1%  6.5%
energy                         5.5% 7.7%       -2.2%
financials                   10.7% 3.1% 7.6%
healthcare                  4.7% 5.9% -1.2%
industrials                  5.8% 4.4% 1.4%
basic materials 1.7% 3.3% -1.6%
real estate                 0.8% 0.0%       0.8%
tech                            9.0% 4.9% 4.1%
telecomm                  3.8% 2.6% 1.2%
utilities                       0.3% 3.6%       -3.2%
other                           9.7% 0.0% 9.7%
govt                            10.7% 45.0% -34.3%
cash                          21.9% 10.0%      11.9%



One bet that has been working well for me is consumer non-cyclicals.  These are companies like KMB and CLX that have products that are usually not dependent on our economic situation.  We tend not to need more Clorox bleach when the economy is good, for instance.  We need more, when we have more people (population growth) and with global standard of living growth - both of which tend to be in a positive trend all the time.

Are valuations stretched?  Maybe.  KMP is trading at 18.4 times expected earnings which is  a shade over 5% earnings yield.  Their valuation is a bit higher than the market (around 15x P/E).  On the plus side, it pays a dividend of over 3% which is a bit higher than the overall market.  CLX is a bit worse.

These companies are still a lot better than owning government bonds.  I like earning 5% on KMB versus 3% on the US 30 year bond.  The only reason to sell them would be that I was trying to get cute and time the market.  But that would bring me to my first statement, that it is better to be focused on long term rather than short term.  Over time, these companies will do well in my portfolio, so they will stay.  They are currently around 2-3% each of my portfolio as are most of my other stocks.

Today, PG is taking a hit because of the "guidance".  Well run company delivering excellent results.  I am buying a bit more.

AAPL, delivered great results but also is guiding down expectations for the future.  They also announced a great buyback program and an increase in dividends.  I would have liked a slightly higher dividend, but a step in the right direction.  My weight here is a bit too big because I am too fixated on it being "cheap".  Well a stock can be cheap for a long time.  I do not understand the movement so I will be selling some of my position back to a 2-3% vs 4-5% position where it is right now.