October 31…SPY still on a BUY

October 31, 2016

As of right now, you made the correct decision to hold SPY these past ten months.

$1,000,000 invested in SPY on December 31, 2015 would now be worth $ 1,042,821 (4.28% excluding dividends )

Please remember, SPY is the benchmark against which all portfolio manager  performance is measured.

So, why pay anyone anything to handle your portfolio, if they can’t outperform SPY.  With just one share of SPY, you have a portfolio of the 500 largest  USA stocks with only market risk, and no risk specific to any one stock. And, you get a dividend of 2.20% plus the future growth of these companies.

Of course, there is still a two-month “wall of worry”  to climb before you can say you made it through 2016 in one piece.

The latest GDP growth figures should encourage Janet Yellen, Fed Chair,  to raise interest rates in December and , probably, the market won’t like that. Also, there is the uncertainty of the USA election and the market abhors uncertainty. Other possible surprises could include a confrontation over Syria, Ukraine, South China Sea etc., domestic terror .  And, who knows what tricks Putin has up his sleeve to create uncertainty in our digitally dependent world ? And, don’t forget this week’s jobs report which could point to economic weakness or an expectation of inflation.

So,  there is your  “wall of worry” for the market to climb.  But, do take comfort in the fact that you don’t have the myriad of negative surprises inherent in owning a specific stock, such as exploding cell phones etc.

I usually add to my portfolio, which revolves around SPY during November / December and this year I’ll begin that process as soon as the market reacts to the election.

Richard Maurice Gore

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