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Financial Fitness & Life Planning

August Update

The stock market was unnerved by a series of events in August, from political turmoil to North Korea to Hurricane Harvey.  It remained resilient, however, and recovered to finish the month flat.  The trend of investor complacency, therefore, continues virtually unabated.  Indeed, we have not experienced so much as a 5% pullback even once yet this year.  While the market pillars of strong earnings and low interest rates remain intact, I am concerned about valuations, Fed tightening and corporate balance sheets. 

For the fourth consecutive month, I added to my fund’s Cisco position.  The market is understandably worried about the revenue declines of the last several quarters.  I believe that the headwinds, however, are more than offset by Cisco’s low valuation, dominant market position, high returns on invested capital, and tens of billions of dollars of net cash on the balance sheet.  It is also making progress transitioning its business toward more software and recurring revenue.

Michael Berlin can be contacted at mberlin@mhbpartners.com and at (631) 629-4928 .

The information included in this article is not intended to be used as a basis for making investment decisions nor should it be constructed as a recommendation to buy or sell any specific security. Consult your investment professional for additional information and guidance.
 

 

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