I've updated performance for August (and July somehow it didn't save previously)

Overall stock exposure is high for me at around 55%.  That said, my portfolio is underperforming as I don't seem to have the "right" 55%.  Part of the problem is that I classify PFF, JTP and JPS as equity and they have behaved more like interest rate sensitive stocks.  I don't disagree with that assessment as preferreds have limited upside.  Back when I first purchased PFF, this was not the case as the preferreds were trading at such a huge discount that they acted like stocks during the rally.  They are now more fully priced, so from here it will behave more like fixed income.  I definitely should have been more dynamic in reclassifying the ETF's in my portfolio.

If I reclassify, my weight in stocks is around 40% and about 60% in bonds.  This would be more in line with my performance versus the benchmark.

In the past, I have not been as concerned with lower returns, as my Sharpe ratio was staying at a comfortably high level.  I have recently dropped below 1.0, which I am not happy with.  The interpretation is that my portfolio is too risky for the return I am getting.  The benchmark is still well above and I should take steps to look more like the benchmark.

Aside from some poor stock selection (AAPL, RAX and few other) the major source of my underperformance is longer duration.   I have had my bond exposure too long versus the benchmark of 10 year treasuries.  I am still convinced that long maturity bonds  are a good buy.  I am not convinced by growth in the US (or globally for that matter).  QE taper, or not, our rates should not be going up.  In addition, my muni bet has been a killer.

I do expect the muni ETF to come back over time (with the help of dividends, of course) but it may take a while.  I should add some more on down days.  If I do, it will be on a duration hedged basis.




KMI
has suffered a close to 10% drop, perhaps on some news that an analyst is going to show that company has some irregularities.

I am going to take this opportunity to buy a bit more of this stock.

CLX and KMB
are trading at relatively high multiples.  I previously trimmed  (or completely got out) of some of my big cap dividend stocks (KO, PG, GE, JNJ) and while that proved to be a good move, I did not sell any CLX and KMB, even though they were just as highly valued.  I chose not to at the time because I reasoned that their higher dividend payouts would shield them a bit more from downside.  I am not so optimistic right now so I am looking to trim those positions and maybe get out.  Taxes can sometimes be a hindrance to moving positions around, but I try my best to not let them intrude too much.
JNJ and GE are now close to buy levels again.

I will look to replace the equity exposure with SPY or IWM.