For the first time in nearly three years, the Dow Jones has closed above 13,000 points. SMIF has positions in several of the equities on the Dow, including American Express, Chevron, GE, Intel, IBM, Coca-Cola, and Verizon.
To date, the SMIF portfolio stands at $936,339.63, aided in part over the last week by Las Vegas Sands, Apple, and Intel.
Today in Class: We discussed the online presence of SMIF (on Twitter, Facebook, and this website), heard the accounting report, discussed filling out sectors with ETFs, and presented additional Buy/Hold/Sells.
Accounting Report, click here for full report. Notably we were called out on AFL and EBAY and are currently holding over 55% of the portfolio in cash.
- EMB by Tom: Hold
- VTR by Alec: Hold
- AAPL by Arvi: Hold
- AXP by Vince: Hold
- FSTR by Ryan: Hold
- TIP by Brendan: Hold
- BMY by Oliver: Hold
- DEO by Stefanie: Hold
- INTC by Jordan: Hold
- KO by Erin: Hold
- LVS by Erin: Hold
- BLK by Lindsay: Hold. The class also decided to sell (20-0-1) April $195 calls.
- UPS by Jeff: Sell. The class voted to sell (21-0) all shares at $74.98. This decision was reached due to worries about Europe and Asia, influenced in part by the IMF’s recent forecast of growth cuts globally.
- GLD by Will: Hold
- SCCO by Will: Hold
Today in Class:
Michael Sena briefed the classroom on a new technology the class could use to speed up votes, rather than using pens and paper. Clickers are provided by the Bucknell University Library and display voting results instantly on the in-class projector.
The econ committee reported on the current US consumption, investment, governmental spending, net exports, and GDP numbers. We expect consumption to rise by 2%; residential investment to remain stagnant and non-residential to improve modestly; government spending to contract this year and then increase at a slower rate over the next five years; net exports to increase by around 4% due to a weak American Dollar, and for GDP to grow by around 1.3% over the next year. We are bearish overall.
- Energy – Oil is down and energy as a whole is not forcasted to grow.
- Financials – These should continue to remain depressed for the foreseeable future, and special attention should be payed to Europe.
- Utilities and Consumer Staples – These will ride out the market, the class plans to overweight.
- Materials – Investment decisions will depend on the strength of the U.S. Dollar.
- Consumer Discretionary – As the economy grows slowly or not at all, we should expect to underweight consumer discretionary stocks.
The class discussed the possibility of a double dip recession and decided that over 2% GDP growth is necessary for sustainable job growth. Housing should be monitored as it will most likely lead us out of the current period of depressed growth.
- TEVA (Monica Wu): Recommendation is to hold. The class noted that margins are down so growth will be hard, there have been no recent brand-name drug approvals, and that sales are down. However, market data showed that out of 28 analysts, 22 said TEVA was a strong buy, so despite general consensus to sell, the class ultimately decided to hold in hopes of being able to sell TEVA at a higher price.
Access the complete minutes here: 09-22
Today in Class:
Students were assigned to sector committees based on the S&P 500 to present within the next two weeks on the outlook for that sector and determine an appropriate sector allocation in the portfolio. Further changes were proposed to enhance the detail taken in minutes. The professors announced that Frank Schreiner would visit the class on October 6th. The accounting committee presented their weekly report, drawing attention to the fact that the fund was still overweight financials and consumer staples.
- Monica Wu – TEVA: More issues centered on uncertainty of TEVA’s generic drug pipeline have forced one more look at this company, scheduled for next class.
- Henry Huang – PG: Proposed to buy 350 shares at $62, but the motion failed. The class considered whether KO was a better buy in the consumer staples sector before ultimately deciding to buy 100 more shares of PG at a $61.16 limit order.
- Thomas Brown – EMB: A proposal to sell due to credit and interest rate risks failed, as did one to buy due to preferable yield. Class settled on holding due to the diversity of holdings and exposure to emerging markets.
- Brendan Smith – TIP: hold.
- Alec Jacobs – VTR: hold. There was some concern over the REIT’s low return but no alternative investment was proposed at the time.
- Jason Katz – VZ: hold, Verizon is one of the best performing telecoms on the market.
- Erin Reddy – KO: recommended a hold but further discussion revealed a desire to accumulate because of Coke’s excellent exposure to emerging markets, which the portfolio currently lacks. Similarly to VZ, it is a better performer than its competitor, PepsiCo. The ultimate decision was to place a limit order for 100 more shares at $69.51