I have noticed an interesting tone to some of the comments in the last day or two, no not referring to the attire of any TV personality on any of the business networks, about indecision and owning cash.
One point I have made many times over is that no one can have all the answers all the time.
One thing that has generally been working this, in terms of smoothing out the ride, has been absolute return products.
Not that they are not down but many seem to be down less or up a little. Down less is a valid goal for a down stock market and if you can find one or two things that are up, all the better.
Conversely there are some things that you should not think would have a shot of going up in a down market. One name in my ownership universe along these lines is the Vietnam Opportunity Fund that I have written about a few times. YTD the Vietnam Index is down 42% while the fund is down about 5%. Part of that could be to the fund having a 7.5% premium to NAV as of its last reporting date. The fund holds a lot of other things besides equities and so it doesn't always correlate.
It is probably a lucky thing the fund isn't down more but if it were that would not be the important thing. This is the time for less exposure to this sort of thing and more exposure to cash or whatever you think of when you think about what to do if you are one to take defensive action.
A little exposure to a frontier market now is not the worst thing in the world but increasing the allocation now if you aren't prepared for another 20% down is probably a bad idea. As global markets start to show signs of sorting themselves out it might makes sense to increase a little, for anyone inclined to invest in frontier at all.
Tonight is the frozen four semifinals, talking college hockey here. The action is always good so if you've never watched, check it out.
10 comments:
If you liked Slap Shot, then the documentary "The Chiefs" is a must watch.
http://www.imdb.com/title/tt0410214/
http://tinyurl.com/2jpz68
http://tinyurl.com/2wvy3a
Roger,
This is where we part ways. While I think you are an insightful, honest, better than average guy, why you choose to continue to like equities is beyond me.
Credit markets are worse than I can remember when. I think we are turning Japanese but by the time I can prove it to you it will be to late.
I could be wrong and we deal with this much better than Japan. I acknowledge that, but it will not get better if those two spreads do not get better.
Personally I think most banks are insolvent. Since that is not an acceptable admission we just have to let the banks pretend to be ok until they earn enough money so they are no longer insolvent. Please do not hold your breadth or expect any credit expansion for a while.
How long is a while? Wish I knew. But buying or keeping a diversified portfolio of equities in this environment seems crazy to me right now (no disrespect intended just trying to make a point).
All that said I am searching for some ideas. Still hate the dollar, but wonder if the devil you know is better than the one you don't at this point in time.
This may read a little negative so I would like to add I do not see the sky falling, but I am not expecting much good to happen unless congress tries to "fix" things. Because a "fix" from congress could really hurt IMO.
seg
flackdoodle!
seriously, parting ways is of course fine and makes the comments interesting.
your use of the word like is incorrect I have to say.
Demand for equities is unhealthy and so I have a defensive posture (double short and relatively a lot of cash as part of the mix).
This has approach has insulated the decline thus far.
I think the difference boils down to philosophy. I don't want to bet client money I can time the bottom. I am comfy relying on something like the 200 DMA to indicate defensive or not, in order to do what I have done thus far.
It is my belief that this is the best way I can add value for clients. You may very well be able to add value going far more defensive than whatever I end up doing.
also part of my thinking is that this is a normal bear market. you can look at the quarter ending video to get some idea of what this has resulted in if you care. if it gets worse i have planned out what to do for more defense but down zero in a down 30% world is not my goal.
Roger,
OK my use of the word like was wrong and I listen to most of your videos. Yes you seem to be doing an excellent job for someone trying to maintain a diversified portfolio. I will give you that.
I am not really trying to criticize you as much as make the point that I think we have more serious banking problems than are widely acknowledged. Further they may last a while.
Yes the Fed could flood liquidity or atleast This is one of the unknowns to guard against. But, I do not see how there could be excess liquidity and the credit spreads below:
http://tinyurl.com/2jpz68
http://tinyurl.com/2wvy3a
So I think being more aggressive. Zero equity is warranted until these get resolved.
BTW, written expression is one of my weakest points. I am frequently inarticulate or poorly express myself.
seg
Love the blog. I'll avoid any market commentary here and applaud your shout out of the Frozen Four! This is only the 2nd year of the past 7 that I won't be there for the event. Arguably one of the most underrated sporting events in the NCAA! Wish UNH hadn't choked, but it looks like this is Michigan's tourney to lose.
I love going to a hockey game but find it does not translate well to standard definition television.
Roger do you have HDTV and it is better or are you that much of a sports nut?
seg
some would say i'm a sport nut some would say not but i think of myself as being a fan of many sports.
as far as hockey on TV my first memory of watching in TV is a playoff series between the Bruins and Rangers in 1972 so to the extent you mean following the puck on tv, it is not a problem.
I used to be a huge hockey fan...don't know why I fell away from it. Although I do think they could do a better job making it translate better on TV. I'm thinking wire-cams and better videography, not blue exhaust on the puck.
I read that the NFL did much better on tv as tv size progressed from 12 to 19 to 27 inches. Same article was predicting HDTV and 52 inch screens would do the trick to win over the masses.
obviously die hards like roger would probably follow a game on the radio :)
Never could get into hockey at all. Reason being, it's the only sport I've seen in America where, if a fight breaks out, the refs stand by and watch it, instead of trying to break it up. I've also read that each team in the NHL has on the roster 1 guy whose entire job is "protecting the star and roughing up the other team's star". It doesn't get more ridiculous than that. Of course, I'm talking NHL, I'm guessing college hockey is more, uh, civilized ?
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