7 Year-End Trades That Set Up My Portfolio For 2020

These are the seven trades - including gold, silver, banks and Treasuries - that set up my portfolio for the coming year.

The changing of the calendar is an ideal time to revisit your portfolio and make any necessary changes to bring it back into balance. For some, that's a simple rebalance, but I tend to reposition in more of a wholesale manner to take advantage of rallies that I feel are about to occur.

That's exactly what I did recently. I made a number of trades to move into sectors I feel are ready to outperform and minimize exposure to those I don't think will.

The video above details each of the 7 trades I made. Otherwise, I run down the list below.

Reduce Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

Justification: Investors have been all about adding risk to their portfolios in 2019 and the early part of 2020. I don't foresee that trend changing for a while.

Dividend growth stocks have been best-performing of the dividend subcategories, but high yield equities have been very disappointing.

If the economy remains solid and the Fed keeps doing its thing, I see large-cap growth stocks (and some small-caps) doing well. If investors get spooked, it's likely over to gold and Treasuries. There's not much of an upside scenario in which investors seek the middle ground and opt for dividend payers.

Buy Invesco DB Commodity Tracking Index ETF (DBC)

Justification: I've mentioned before that commodities are at multi-decade lows relative to equities. That's been the case for several years though and prices still haven't budged.

That could finally be poised to change. The trade war is choking the agriculture industry, while I expect metals, such as gold and silver, to finally begin realizing their value. The outlook for oil is less optimistic, but there are enough positives in place to be bullish on this sector.


Justification: The activity from the Fed is going to keep interest rates suppressed on the short end of the curve. Price inflation, which has been creeping up over the past several months, could lift rates on the long end.

That's a very bullish scenario for banks, who could see their margins expand and lending activity grow. Add in that, despite the 30% rally in the S&P 500 last year, there still hasn't been a massive shift of dollars out of fixed income and into equities.

If that happens too, financials could be one of 2020's leading performers.

Add iShares Silver Trust ETF (SLV)

Justification: I remain bullish on precious metals in 2020, but am especially so on silver.

Why silver over gold? The silver/gold ratio is incredibly low and the value aspect of silver gives it greater upside. I have a $20/ounce short-term target on it with the possibility of hitting $25 by the end of the year.

Buy VanEck Vectors Gold Miners ETF (GDX)

Justification: I'm bullish on gold for the same reason as I am silver, since inflation could be an increasing problem this year.

My play here is gold stocks over gold. Mining stocks are especially aggressive relative to the price of gold and could significantly outperform as it moves towards the $1700 to $1800 range, which I believe it will later this year.

Gold miners aren't for the squeamish, but there's a lot of upside here.

Buy E*Trade (ETFC)

Justification: I don't typically dabble in individual stocks (outside of big names, such as Apple), but I like the potential of E*Trade.

The primary reason is Schwab's acquisition of TD Ameritrade last year. As commissions dropped to zero for most brokers, the pure discount brokers, such as TD and E*Trade, instantly saw their business models in trouble.

Just like TD Ameritrade got snapped up quickly, I expect E*Trade get similarly bought out and for a premium price. No timetable for when this might happen, but the narrative makes a lot of sense.

Sell iShares 20+ Year Treasury Bond ETF (TLT)

Justification: I mentioned my concerns about inflation already and this is an extension of those fears.

If inflation heats up, we could see the 10-year approach the 2.5% level, translating to roughly 12% downside for long bond prices.

Investors moved a lot of money into fixed income in 2019. If that begins to rotate back out, it could further exacerbate a rise in yields.

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