Bought VLO…Sold WMT

The markets have been down and the S&P500 is resting on its 100dma; however, I’m optimistic and take some comfort in the fact that the VIX has remained relatively calm.

I think a lot of the panic is due to the EU Parliament shakeup- which is driving the Euro and their rates lower, consequently dragging down US Treasuries.  Taken at face value, the decline in the 10 Year Treasury yield looks recessionary; however, given the fact that German Bunds are yielding -0.17, it’s understandable that US rates are being artificially pulled down to 2.23%.

So…I’m using the market turbulence to buy the dip, while also locking in a long term profit.

BOUGHT

The petroleum refining sector is a cyclical business and has lately been in a rut.  I especially like Valero (VLO), which is hovering above its long term moving average.  Could it go lower?  Absolutely, but it’s a well managed company, pays a nearly 4% dividend, and has a very attractive valuation.  I think this is a good entry point and worth holding until the sector turns around.

SOLD

Last week an Options Call on Walmart was assigned, so today I sold the remaining positions.  I’ve held Walmart for nearly four years and given its recent strong relative strength, the decision wasn’t easy.  But its valuation has gotten expensive.  So to mitigate risk, I’d rather exit on a high note and lock in substantial long term gains. 

Reply to this email if you’d like to hear more about my rationale for selling Walmart.  If there’s enough interest, I’ll cover that topic in the next episode of the Wealthsteading Podcast.

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