I'm Playing Portfolio Defense With More Volatility Ahead
Why I initiated positions in Abbott Labs and United Health over the last week.
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Investors are experiencing some interesting market action as the first month of 2026 heads to a close. Precious metals are selling off with silver down 10% in early trading as of the time of this article submission. Of course, after being up some 60% for the month earlier this week, some profit taking was long overdue. Gold has also pulled back sharply since briefly crossing over the $5,500 an ounce threshold for the first time ever early on Thursday.
Some kinks are also starting to develop around the AI narrative that has driven the lion’s share of equity gains for over three years now.
Morgan Stanley slashed its price target on Oracle (ORCL) by a third earlier this week as it believes the company’s huge surge in capital spending is going to push EPS lower than expectations. Microsoft (MSFT) had its biggest one-day decline in nearly six years on Thursday despite posting Q4 results after the bell on Wednesday that bested the bottom- and top-line consensus. Inline revenue growth from Azure and mounting concerns about the company’s spending on artificial-intelligence relative to its ability to monetize AI were singled out as reasons for the sharp pullback that chopped more than $350 billon off of Microsoft’s market capitalization.
Meta Platforms (META) advanced on Thursday after posting its own fourth quarter results, largely offsetting the hit to the indexes from Microsoft’s losses on the day. However, Meta projected its capex budget will nearly double in FY2026 to a range of $115 billion to $135 billion. Notably, the mid-point of Meta’s guidance is approximately what Morgan Stanley believes will be industry wide AI revenues in FY2027. Meta also posted a $6 billion loss from its Reality Labs division for the quarter. This means the company now has nearly $80 billion in cumulative losses from VR and Metaverse programs to date.
I see more volatility ahead for the markets in February and I have been getting more defensive putting "dry powder" to work across my portfolio this week. I picked up an initial position in United Healthcare (UNH) via covered call orders after the stock plunged on Tuesday following disappointing Q4 numbers and guidance. The decline pushed the stock’s yield to 3% and into value territory from a longer-term perspective in my view.
I did the same with Abbott Laboratories (ABT) following its own decline following its fourth quarter results and guidance late last week. Abbott is a very diverse healthcare concern focused on the development and marketing of medical devices, diagnostic products, branded generic pharmaceuticals and nutritional goods across the globe. The company has a rock-solid balance sheet and should continue to churn out roughly 10% earnings growth as revenues rise in the high single-digits. The stock also yields 2.4% and the CEO purchased some $2 million worth of shares on the pullback earlier this week. It was first notable insider buy in the shares in many years.
And those of a couple of my final trades in January as the opening stanza of the new year comes to a close.
At the time of publication, Jensen was long ABT and UNH.
