Our SMSF has had a tremendous quarter, easily the best ever. I’ve set the following graph to a base of $100,000 as the figures don’t matter it is the performance that I’m pleased about.

While I don’t normally share my actual positions and won’t make a habit of it I’m hoping it doesn’t hurt this once, though I see little value in doing so. Perhaps my sector weighting and concentrated style may be of some interest. ‘All Others’ is mainly MQG and a couple other tiny positions, which I must get around to selling. Don’t take anything here as a recommendation.

The Fusion Portfolio had a great month and has increased it’s outperformance to 17.5%.

Despite the excellent outperformance the portfolio remains underwater after 18 months, though it could burst into positive territory any week now. That’s disappointing, but most fund managers have done worse and they get paid to spend all day managing their funds.

I’m still ambivalent as to the future of the Fusion Investing Portfolio. The main reason for starting the portfolio was to highlight the dual ludicrous claims that markets can’t be timed and that maintaining a 100% equity allocation is a sensible strategy. I feel I’ve proved those points and aren’t sure why I should keep the portfolio going.

Swapping back to real life my updated investometer is below. I now realise that the investometer only tells part of the story. I raised cash in the larger account via sales of JetBlue Airways and Facet Biotech, but due to equity appreciation the cash raising is muted on the chart. Similarly, rising equity values exaggerated the effect on the cash balance in the growing account, after I made one investment. Still it’s not a bad snapshot tool and I’m happy with the investment level in each account.

If US equities continue to rise I will sell further positions in the large account. Two retailers and three tech companies are top of my sell list right now.

When I read something like the comment below I wonder is the guy full of it or actually saying something of value. If such a pattern existed traders would be all over it and the pattern would soon disappear.

“This is the breather day, just taking it all in,” says Marc Pado, U.S. market strategist at Cantor Fitzgerald. “… The way earnings seasons typically goes is that you have a period where the markets rally into earnings, you get the coattails from the big releases in the first full week, and then the individual companies if they hit or miss tend to move stocks but not the group. Finally, get to where you sell the news regardless.”

via Stocks Close Mixed; Alcoa Beats | TheStreet.com.

Looking at the S&P 500 I see little evidence in the last earnings period or previous periods to support Pado’s claim. Alcoa generally kicks earnings season off, reporting early in the second week after the quarter close. Their last four dates were 7-Oct, 8-Jul, 7-Apr and 12-Jan.

Notice back on 8th July the market fell into earnings and kept falling despite Aloca beating estimates. This time around the market was indeed rising, but there are many more plausible explanations for that than a simplistic ‘market rally into earnings’. I checked the last couple years of earnings and did not find the correlation between market direction and earnings that Marc Pado described.

Of more interest was the bounce off the 50 day moving average. Also if you cast your eye back to June, buying the golden cross of the 50 day over the 200 day would have been a good move. At the time I said those using that strategy were late to the party and should have bought earlier, though I’m sure they’re happy enough with their 20% gains now. At the very least these major technical indicators should be a strong impetuous to examine your positions and outlook.

It’s school holidays so the kids and I have been busy alternatively amusing and annoying each other. It’s been fun and funny, so we’ve laughed.

My draft posts have hit an all time high as I start, but don’t get the mental space to finish anything. So I’ll keep this one simple.

Safety Insurance (SAFT) closed up 2.47% to $34.01. Book value was $39.20 at end of Q2 and will be over $40 when Q3 is announced. At some point in the future the share price is highly probable to be above book value and book value is adding around $1 a quarter.

There’s a nice $0.40 quarterly dividend, 4.7% yield,  for patient investors who are prepared to wait for the share price to over-take book value. I have been amused when investors spoke of particular shares as their cash reserve, but SAFT almost fills that role for me. If there is a large market sell-off SAFT is very unlikely to fall as much as the overall market.

SAFT remains part of the bedrock of my portfolio. Their investments are all high quality with no subprime exposure. “All of our mortgage-backed securities were either U.S. Government or Agency guaranteed or are rated Aaa/AAA.”