I write all the time about a portfolio being a mix of things working out well and things that are not. The blend of the two gives you your result.Some things go down because whatever part of the market they are in is going down. Other things go down because of their own problems. Or lastly a combination of the two.
I have disclosed having exposure to Iceland for a couple of years. I have an account at Kaupthing Bank with some kroners and an ETF. I also own a few shares of the Stockholm listing of Kaupthing personally and for a couple of clients--we are talking very small positions.
Based on the last six months or so I may have been better served to sell but I didn't. I view Iceland as a long term idea that is vulnerable to global problems in the financial sector. In the time I have had exposure there has been more than one wild ride. This may seem a little different but I really view this as a multi year commitment, similar to Vietnam, and while taking a trade earlier on, in hindsight, would have been better (and to be clear I have done that once or twice but it has been a long while since doing that) the drop does not phase me even slightly.
I view it as a multi year hold, as I said, but just because I have unyielding faith that does not mean Iceland will work out. I could be wrong and it may not work out. In thinking really long term, which everyone says but I think few people do, some ideas will work out and some will not. Two years is too soon to be right or wrong.
If my conviction in Iceland is wrong and my original 2% position goes to zero over a period of several years that will be too bad but a 2% position from 2006 that ends up going to zero (to be clear this is not my expectation) won't mean too much in 2010 or 2011.
A portfolio that includes three or four concepts like this, each in very moderate proportion, is certainly not right for everyone but is far from reckless.
8 comments:
Roger, I'm reading lots of commentary about insider buying, stock buybacks, analyst upgrades, etc. as guideposts for stock selection in this market. Would you comment how how much weight you give this kind of activity in your top down approach to stock selection please? To me, they don't seem compelling reasons to buy in and of themselves if a company's fundamentals are lousy. On the other hand, they're touted as proven signals that people in the know see value where others don't.
Thanks very much.
Those things mean little to nothing to me.
buybacks are complicated because far more get announced than actually implemented. there are also trading mechanics issues that make buybacks kind of difficult to do, this is governed under what i believe is rule 10b-18.
Insider buying should be a good thing but I'm just not really sold on it (personal bias).
Your Iceland investment may be dissapointing, but I hear the women of Iceland are a fabulous short term "investment".
when i went there i was with my wife and of course did not, ahem, notice.
With all the interesting discussion yesterday about historical volatility of the .spx, I was hoping that someone would notice that we bounced off what looks to me like one standard deviation of volatility..if that is an accurate way to describe events. Is it? (I made a more detailed post last night)
jasper
Insider buying..
Roger,
I've had some success following insider buying (Tupperware), but would only consider it a single part of the "puzzle". If its there..it would go on the "plus" side of the ledger, but its absence wouldn't put me off, if other things looked good, fundamentally.
Jan
Roger, what about short term forex investing in Iceland? Putting money in savings there to take advantage of their high interest rate? If I wanted to do this, how would I go about transfering the money into an account or CD there? Might this also be a good longer term investment. Thanks.
The article is all about my view as a long term hold. Short term would be a guess
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