I'm assuming that during the Great Recession, you did quite a bit of juggling to minimize paper capital losses. For your retired clients I would understand, but for your own personal portfolio, i wonder what you did.
My reply;
What did I do personally? I am very fortunate to have essentially no overhead (no mortgage, credit cards or car payments), consequently I have a very high savings rate relative to my income and needs. As a result my equity allocation is quite low for someone my age to which I would add I hope to do this work until I am very old--my dad is 85 and remarkably fit. While I do not think I would have an emotional reaction to stock market volatility (which would distract me from my job) I have removed the possibility, I'm 25-30% equities. My view on what my job should be leads me to conclude that I should not be spending a lot of my time trading my account.
If you look at my archive of posts (I don't really expect you to do that) you will see I was very early in recognizing the market was going to have a problem so I bought a levered inverse fund for clients and sold maybe half a dozen stocks out of about 35 holdings before I started buying back in slowly in early 2009 (I did add to our Statoil position in late 2008). Is that "quite a bit of juggling?" You might think it is, I don't know but that is what I did for clients.
Obama's press conference last night at 6pm eastern was fascinating. He was furious, I mean really angry over how the republicans are behaving with these negotiations. To be clear, I am not expressing a judgement on the republicans behavior merely stating that this is what is making him so angry.I've read criticisms of Obama questioning his leadership, mostly from republicans or people otherwise on the right. This episode has given me the impression that somehow Boehner and company don't have the proper amount of respect for the person occupying the Whitehouse.
On a lighter note Friday's stage of the Tour de France up Alpe d'Huez was fantastic. Congrats to Pierre Rolland for an amazing stage win, tracking down Alberto Contador shortly before the finish.
16 comments:
Just out of curiosity, when you or others give an equity allocation, "I'm 25-30% equities", do you mean in terms of an investment portfolio or do you look at it in terms of total net worth (home owned, business owned, etc)?
Re Obama, excellent (IMO) Peggy Noonan op ed in today's WSJ
Out of the Way, Please, Mr. President
just investment portfolio
If you don't mind, where is the remaining 70%.
Another question (anon 6:38 here), have you or might you (personally or for clients) taken any portfolio action based on the political situation? Or will you just continue to heed the 200 dma rule?
Not asking what specifically, just if.
nothing too unusual, Canadian baseball cards and antique Pez dispensers (humor attempt)
not having US banks or US treasuries is probably a good start against the US "defaulting" but this has been our position for years now
I really wonder where the games are being played. House has been up front on what would work. Senate has been up front. Obama has been moving with polls(IMHO).
The legislative process has not been working. Where is the diplomacy and house/senate bills that can be compromised into a working plan.
I fully understand Boehner's displeasure. Obama and Geitner are playing a dangerous game with their specious fearmongering (the military won't be paid; no SS checks issued, etc.) and talk of a possible default and a downgrade of U.S. debt. In reality, there is more than enough revenue to pay the interest on the national debt. Compounded with Obama's vitriolic press conferences and self-importance, I think the well has forever been poisoned. Sadly, the rating agencies will probably give him his wish.
I would say that one should not infer from the president's anger that the Republicans do not respect the person occupying the White House.
Given the recent News Corporation scandal and all the information that's come out about how Murdoch controls editorial content, why in the world would a rational person point to a WSJ editorial writer?
30% equities - that's pretty interesting, Roger. I wonder what kind of performance I could get with that. I use an approach like that for a portion of my savings that I consider long term (i.e. saved for big events).
I'm similar low overheads to yourself Roger, with a 37.5% stocks, 12.5% gold, 50% 5 year treasury ladder type target allocation.
not having US banks or US treasuries is probably a good start against the US "defaulting" but this has been our position for years now
Presumably a large chunk of foreign currencies/deposits then ?
One of the sticking points on the debt ceiling deal/non-deal seems to be the democrats want to put "revenue enhancement" (that would be "taxes") in the early years (like 2012) and cuts in the out-years (meaning the cuts will never materialize); republicans, conversely, want the opposite. Why don't they just stop the charade and talk about next year (maybe also year after next, but certainly no further out) enhancements and cuts, as they are the only ones that have any meaning? The ratings agencies know this and the American people, at least some of them, are also realizing this. Out-year cuts and revenue enhancements are meaningless, as the congress of 2020 is certainly not going to consider itself bound by promises made in 2011. Just curious, anyone know what the 2011 projections were for gov't revenue and spending that were made back in 2001?
As for the republicans not respecting the president. I never "respect" the president, whether he/she be republican, democrat, or some third party. The person occupying the presidency has tremendous power, and the wielding of that power is always swayed by his/her political left/right leanings. The first 2 years of Obama's presidency clearly shows exactly what he is all about, and that's what the republicans don't "respect."
In any other environment I would have been out of government bonds as a savings vehicle some time ago but in currently they remain valuable in that regard, albeit not as much so as the past two decades, and their value as a deflationary hedge is only growing.
WRT the "debt ceiling" wrangle, those bonds could become worth a lot less in a hurry it is true but whether Republicans respect Obama is irrelevant: Ego's, partisanship and other foolishness aside, Congress holds the purse strings, not the POTUS.
Wrangles over the debt limit have historically been Kabuki theater, just an opportunity to score points and wring some arms, but this wrangle is getting too close to the bone. It doesn't matter in the slightest whether there is "enough money" in the system to keep paying off debt in support of some programs because some debt cannot be redeemed as a matter of law and that is a default by definition.
We can call it temporary, the merest delay, or we can call it blue cheese but there is no way to shade the fact and that is why ratings agencies have already put US debt on the negative watch list.
Remember, the "debt limit" is to fund debt that has already been incurred by previous legislation (which is why other countries don't bother with it; why pass a bill you don't intend to pay for) so the Republican Congress should declare victory and raise the limit now because even waiting until the putative deadline will reduce US creditworthiness: Not a good thing at any time and disastrous under current circumstances.
Whether an elective default by Congress is even legal I leave to experts but suspect Congress is on shaky ground there too; e.g, PERRY V. UNITED STATES.
It seems to me that its fair to ask successful businesses and their owners to pay a bigger share because they have taken a big share of the resources the public has provided them. They use the public roads, and infrastructure to run their business. The public paid for their employees education in general by providing public schools and universities etc. All I want them to do is pay their fair share of the resource usage.
1:33 your comments make so many vague assumptions as to not make a lick of sense.
If you are talking about my comment re resources I think they make total sense. I am always amused when i hear stories of the self made man. Sure this person though striving and hard work made a success for him or herself but by using resources paid by the public--- Public schools, roadways, communications infrastructure including the internet. Who paid for the internrts development --the us government through DARPA.Sure successful people worked hard but society gave them the tools and by in large their sucess results in their higher use of public rersourcers than the average person. Does fed ex use the highways more then the average person. Do you think they pay the real cost of the roads and airports they use through truck registrations. No on top of this they shield their profits off shore and pay a lower tax rate then the drivers they employ .Hope you se my point. I bet you went to a subsidized public college--- did you pay market price for your education?
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