Geez - The boring markets are getting to me. Indexes have been stable except for the Apples, Teslas, and Amazons that seem to keep going straight up. (Inversely, the airlines seem to be going straight down,) Hard to get excited about bonds, even after the 10-year spiked to near 0.75% this morning. Heard recently that spreads are quite narrow on junk bonds which would mean they’re not a great play. I like energy, gold and the inflation hedges longer term, but they’ve come too far too fast IMO.
I’m hanging on to PRLAX which was down 50% when I bought it a few months back. It’s now “only” down 26% YTD - representing a nice 24% gain in less than 6 months. But I’m not seeing anything near as tempting now. If I had the capability I’d short some of the high flyers. But I’m not equipped to do that being in traditional mutual fund houses held directly with the institution. Going to cash as a spec move is another option - but knowing when to get back in is a tough call. As for shorting, the closest fund I have to that concept is TMSRX, but you’re putting a lot of faith in the manager making the right call, if he wants to short at all.
As always, if you knew which way inflation will run over the next 5 years, the call would be easier. Deflation would make bonds and paying off a 3.3% mortgage smart. Inflation would make those investments somewhat dumb. Than there’s the election, likely to roil the markets, but in unpredictable ways. Geez - They could do anything from staging a “relief rally” to taking a nose-dive and possibly a big bounce for metals, or for bonds for that matter. Of course, if the whiplash isn’t as bad as folks fear, the metals could tumble on the good news.
So how to make a quick buck near-term that you can later roll into your normal allocation for a leg-up longer term? Ideas? (Wiseacre answers prohibited.)
Comments
I have been pondering much the same as you and have been looking for an opportunity to parlay a little cash that I made from previous spiffs. In addition, my portfolio generates a good cash flow and it looks as though I'm going to add to my commodity strategy fund BCSAX along with some going into a global asset allocaton fund (GAOAX) as well. As the economy improves the need for commodities should follow with increase in their demand. In addition, with the declining US Dollar this makes some foreign equities attractive plus they are not nearly expensive as the domestics. My commodity strategy fund holds a good amount of foreign securities along with some miners and metals. Plus, this fund should due well with inflation. GAOAX will spread the money across many asset classes, both domestic and foreign, with some going to both bonds and stocks.
If you are wanting to follow momentum, for the past rolling 90 days my three best performing funds have all come from the growth area of my portfolio with returns of better than twenty percent. They are SPECX +25% (Large Cap Growth) ... ANWPX +22% (Global Growth) ... and, NEWFX +20% (Emerging Markets).
However, for a spiff (special investment position) it looks as though I will just have to sit and await the next stock market pull back or a good size dip before engaging. Plus I will need to see a reading, on my barometer, in the high 150's to low 160's before putting one in play.
I will admit ... it hard to just sit. But, that is were I am as I am pretty much fully invested within the confines of my asset allocation. If I were to keep buying equities, at these elevated price levels, then I'd have no room for a spiff when that door opens. So, for now, I sit.
In addition, if equities continue their upward pace it will not be long before I have to rebalance and trim my equity allocation for the third time since the rebound.
Thanks for your post O_S.
Stay safe all, Derf
Not talking about core investments, just play money. I’m forever influenced by Bogle’s “reversion to the mean” and also a comment by Sir John Templeton about 30 years ago that “very rarely’” does a market go down more than 50% from its high and stay there for long. However, that’s a rule of thumb - not a fact. Japan has disproven him to some extent. Very narrow markets like gold and silver have also had no problem diving more than 50% from peak in the past. And than, there was the “tech wreck” around 2000.
On the shopping list are some EM equity and bond markets, formerly fine international funds like DODFX, and real estate funds. None appear badly enough beaten up at this point to dive in. My cash is at a relatively low 10%. Everything else is in some type of more aggressive investment, be it income producing, commodity related or diversified equity. Part of me wants to lower exposure to balanced funds and increase more “pure” equity due to the present “return-free“ nature of most investment grade bonds. But, that might be akin to jumping from the pot into the fire.
Thanks for your input.
It will not take much inflation to crater all but the shortest bond funds, and there is very little difference in the yield as duration goes up. That would imply shorting junk bonds which you can do with ETFs
The dollar has dropped significantly so will probably rebound soon but unless the US gets it's house in order I think it will continue down, making the case for some Gold and Commodities.
I think some EM are doing far better than we are with Covid, but their economies are so linked to ours you need to know more than I do to pick winners. China clearly seems to have controlled Covid but I do not trust their accounting and think there still may be real danger of a major debt induced crash there.
Much of the current reports out of major brokerages recommend hedges and puts, strategies which I have yet to figure out but there are ETFs that have done a pretty good job with them like TAIL
You could also play the Covid recovery with JETS and other ETFs or funds loaded with aerospace, cruise lines restaurants and hotels. Eventually things will get back to normal and there will be a huge pop when there is a successful vaccine announcement although it will be years before it controls covid,, I think
If so , that maybe the time to take some profit. As / myself , I think market has been over priced for to many years. With all the QE & money drops it's hard to figure Mr. Market !
Stay Safe, Derf
Looking at the 3-month charts, nearly everything is up anywhere from 5-15% over that short period, even though YTD several funds still lag. Real estate might be OK as a bet, but not sure. Suspect it would pull back along with equities on the next market correction. IMHO better buying opportunities will come along. Not selling anything. Just not ready to speculate. I already have 3 small 1-2% spec plays running: PIEQX, PRLAX and OPGSX.
I guess like everybody else, I’m looking for niche plays to add a bit of return in this extremely low interest rate environment. And the macros look compelling with the Fed throwing money at the system and the Administration goosing markets as much as they can for the election. If all that isn’t enough, there’s speculative fever in the air and a tendency to want to jump on the bandwagon!
i sold TDOC at $150