Hello Gurus,
This rally seems to have gone beyond its means, to state the obvious. While consumer confidence, P/E, etc look okay, it looks to me that we are ready for a substantial correction. A quick glance at Bob's momentun website shows extensive red change in momentum.
Are you holding/selling or buying and at what levels? What signs are you looking for?
I am thinking of lightening up 50% of my tax sheltered portfolio and going to cash.
Please advise.
-Bhopali
Comments
Great question, the answer is worth about 14 trillions dollars! To tell you the truth I don't have any crystal balls for future predictions [Maybe Ted or Rono/Scott/RW/BobC/ has it
Just give you an example, my 'Boss' at work is 50s years old, he has been 60s% cash and 30s% stocks w/ a little bonds since late 2008 [got out at the worst time like everyone else did], he has made about 10S%!!!! since then because he has been jumping in and out [trying to be market timer]. Although this strategy may work for him and he is somewhat not very happy w/ the results.
For me, I break my money/portfolio into several basket:
Bulk of the portfolio - long term [does not matter what happen, just leave it there and continue buying 80s% stocks and 20s% bonds] because I have about 30s% years to retire, this is every aggressive because I can handle the risks...Plenty of time to catch up. I would 'redefine and reballance' the portfolio every 6-12 months. I made a killing since the recovery started, but lost abouts 55s% from 2008 - 03/2009. this portfolio however has made its way back and now is above the previous high levels. This is the monies that I don't need until long term. I contribute twice monthly into this '401k' portfolio.
The other portfolio I do need maybe in 2-5 years, for this one I buy bunch of corp bonds and muni bonds [mostly BBB+ or higher grade, good quality bonds from firms I trust like E.Jones or Schwab since they do try to protect investor and they don't sell many junk bonds]. I could consider this is my 'cash' portfolio and I can get in and out of these vehicles if I do need emergent cash.
I do trade very little [maybe about 2% of portfolio], I buy bunch of stuff dependent on the momentum [like EWJ Japanese ETF, Gold, maybe silver and more commodities] but very little because I do want to keep my day job otherwise if I do that full time I would be a street beggar.
I do believe the trend is your friend, I think we are in the middle of a 3-6 years recovery [just look at the sp500 chart over the past 3 years], dependent on what the Feds do and dependent on US interest rates/how Govt manage US Debt, I think this is Camel that may 'break its back', and it's worth 14 trillions dollars.... If Feds/US Govt, Tax issues are in Wallstreet's favor & expectations, we may have a very good and reasonable sustain recovery for at least few more years. Having said that I am mostly wrong and we may have a black swans tomorrow and there would be blood on the street. These are just my opinions...
so the short answer is yes, I am buying but I do have a long term to recover if there are major set backs...
If you are conservative, perhaps a 60s/40s% or 50s/50s portfolio maybe reasonable and may help you sleep better at night...perhaps more safe bonds, US T, or munis/corporate [BB+ or higher, short term 3-10 years]
good luck and please share w/ us what your thoughts are
thanks for this great question
I do not believe that everything is now sunshine and rainbows again; many of the problems that got us into 2008 have not been solved, only papered over and new problems created by current policies (I went into this in great detail on fundalarm, I'm not really interested in doing it here as much.) I mean, take Friday and the discussion of a meeting regarding Greece and how the spokesman for the prime minister of Luxembourg was told to lie: "Schuller repeatedly said no meeting would be held. A meeting was held. Asked to explain the lie, Schuller was brazen. ****“I was told to say there was no meeting. We had certain necessities to consider.” And those necessities were? “We had Wall Street open at that point in time,”*** Schuller told Forelle. He said that the online report had “overhyped” the meeting and the euro was falling as a consequence: “There was a very good reason to deny that the meeting was taking place.” He described the lie as “self-preservation.” ***Hilariously, Schuller went on to say that being caught out lying in this way would not undermine the market’s confidence in future eurozone pronouncements – because it already had no confidence. He said that when Juncker or other senior eurozone figures say something to the markets “nobody seems to believe it.”*** (http://blogs.telegraph.co.uk/news/davidhughes/100087136/he-may-be-a-prime-minister-but-he-admits-he-lies-his-way-out-of-trouble/)
That said, I don't think one can be heavily in cash, either - some cash is fine, but rather than going very heavily (half) to cash I'd rather dial down risk (significantly, if need be) until a comfortable point above cash is reached.
Crystal ball? Who knows. I really have not changed my views on where things are headed and remain largely invested in the same manner, aside from some tweaks and some normalization of allocation (I'm not as heavily Asia as I was two years ago, some commodity exposure has been reduced, but I still think that both are themes that I want to continue to stick with). There are some investments that I really have a very long-term view on (including some that I don't plan on selling for 5-10+ years - as I've mentioned previously, the primary one in that group is Jardine Strategic Holdings, which I've actually moved some allocation from Matthews funds to, as while there is stock-specific risk, I think Jardine is a great looooong-term play on Asia with its widely varied businesses), but otherwise I remain very flexible.
The article just might provide you with the information you seek.
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aMNv1spmxHwI&refer=us
Good Investing,
Skeeter
I'd be cautious and quick to rebalance - and take profits.
Watched a great interview TWICE of McCully and Consuelo Mack. He avers strongly that you should NOT put anything into equities at this momemnt, rebalance and profit take your emerging mkts and that the sweet spot is munis. He likes US large caps as the value play.
Google the interview, but if I may be so bold. He feels the stock market is at or near the top and that the Fed will be raising rates sometime from 6-12 months out. This will result in an immediate 10% correction in the stock market. He thinks emerging mkts have done great but suggests everyone rebalance and rake off their profits. He loves the yields on munis AND mentions that US large caps have failed to participate heretofore in this rally to the degree that small caps and weird [my spin] have led the parade. If you recall from history, small caps always lead the way out of recession financed with cheap money. They have done so again and we're approaching the time when the money becomes more expensive only the big guys have it on hand. [mr softie buying skype fof 8.5 B today].
He also talked about the bifurcated economy [rono wants credit for Economies of Yes and No] and how that is damn scary and everyone that matters knows it. He likes Uncle Ben a lot and says he's aware that the stimulus and easy money as benefitted wall street and ignored main street. duh. A few days ago the CNBC poll question was something about - do you see revolution coming to america - and 77% agreed. Commentators were shocked but that shouldn't surprise anyone.
Folks, I'd be cautious.
peace,
rono
on US markets? Which fund of the Matthews group does it compare to? And why did you move over to this and leave Mathews? Your insight into the change would be valuable.
Prinx
Jardine Strategic Holdings is a stock; the name sounds like a fund, but it is a holding company related to Jardine Matheson, which is an Asian conglomerate that has been around since the 1800's. It is the majority shareholder of Mandarin Oriental Hotels and is a major shareholder of its parent, Jardine Matheson. I find Jardine's wide-ranging businesses and lengthy history to be fascinating. You get investments in everything from Dairy Farm (a massive retail conglomerate that stretches across Asia that owns Ikea in Hong Kong (the fastest growing IKEA) and Taiwan, hypermarkets, 7-11's and a wide range of other stores across Asia) to land (Hong Kong land) to operation of cargo at Hong Kong Airport's terminal 1 (the largest single air cargo terminal in the world) and more.
Again, this is a single stock, so there is absolutely single stock risk. Nor do I think people should leave Matthews funds. However, *personally* (I emphasize personally; anyone considering the stock should absolutely do their research) as a non-fund long-term play on the region, I continue to think that Jardine offers an exciting and wide-ranging mixture of businesses. While a rather apples-to-oranges comparison, I view it sort of as an Asian Berkshire Hathaway. If one doesn't believe in the Asian story over the longer-term, then it wouldn't be of interest at all. Otherwise, I view Jardine as the one "non-fund" Asian play that I feel comfortable with putting away for the long-term.
JARDINE MATHESON HLD (SINGAPORE) 9,598,800 / $427,530,552, 0.52%
Lessee now... if CWGIX is 4% of my holding, and Jardine is .52% of CWGIX, then my share of Jardine is.... not a lot, I guess.
Seriously, American Funds is a pretty conservative, almost stodgy, outfit. I suspect that makes Jardine a pretty decent bet.
Rono and Scott - what are you doing from a cash/equities balance perspective?
I remain in some single stocks (although a couple of those are not being sold for 5-10 years, so those are just locked in no matter what) and remain in a moderate amount of stock (including a few balanced funds, including AQR Risk Parity and Rivernorth/Doubletree) and commodity funds. I don't think it's the time to take massive risks AT ALL, but I do think it's still the time to stay invested (again, at one's own comfort/risk level - and that's really important to get a sense of that, as my comfort/risk level is going to be different from everyone else's - there is no "right answer") in a very global manner. I think inflationary concerns will be around for a while (and possibly a long while.)
HighMark Value Momentum Fid 44,600 shares 0.60%
HighMark Large Cap Value Fid 31,050 shares 1.26%
MMA Praxis International Index A 1,684 shares 0.19%
Liberty Street Horizon owns shares of JSHLY.
MDISX Mutual Global Discovery owns Jardine Strategic Holdings (2,700 shares) and Jardine Matheson (1,600 shares). PATHX Pimco Pathfinders Owns Jardine Strategic Holdings (94,500 shares) and Jardine Matheson (96,400 shares) which combine for 1% of fund. All of these holdings are from last September. None of the Matthews funds own them, but they have some exposure to Singapore. Here is a question though, a few Matthews funds (Pacific Tiger, Asian Pacific) own shares of Dairy Farm International Holdings, Ltd. Is this a separate company or a partially owned subsidiary of Jardine?
(Update) Jardine Strategic has a 78% shareholding in Dairy Farm. Dairy Farm International Holdings is incorporated in Bermuda and has a premium listing on the London Stock Exchange, with secondary listings in Bermuda and Singapore.
Did you buy pink sheets?
I think when people describe their relative positions, compared to their own prior (and perhaps expected future) stances, it is most informative.
I say this because when trying to compare allocations across different portfolios for different people, I get confuzzled about possible apples/oranges comparisons.
For instance: when people are talking about allocations to different asset classes within a portfolio, I don't know how to interpret "portfolio". Does "my portfolio" reflect all potential resources, including say "emergency fund" cash and somewhat illiquid investments like real estate and fine art (per the Rothschilds), somewhat liquid collectibles like gold coins (per Rono)? Or does "my portfolio" refer to something more narrow, like "money in tax-advantaged retirement accounts" or "money I have for my own reasons decided is investable in securities of various types"?
For those already retired, it can be hard to infer context: is this money you eventually expect to live off of, or are you already able to live off of income from social security and a defined benefit pension? Do you have other protections in place like long-term care insurance?
To take one example, it is pretty clear from his postings that Scott has quite a sophisticated portfolio, with many elements (including plans to hold onto some single stocks for 5-10 years). So while I find all his comments extremely interesting, I am quite cautious about attempting to imitate what he is doing, since I am a pretty dull stick with a limited range of approaches I am willing to try in the handful of portfolios I handle for people in the family.
gfb
I certainly do take some risks (although I wouldn't consider what I do very aggressive as a whole), but am interested in a wide-ranging group of asset classes and strategies. My approach is definitely not traditional, but for me I think an element of it is a learning experience, from taking the step to invest in some individual EM stocks (starting from square one learning about companies I've never heard of vs letting managers do that selection - some might work, some might not, but I think the research process has been highly enjoyable) to buying funds on the London market and other aspects.
There is a very large element of research in terms of the choices made, but I think it's also learning about new methods/asset classes and learning even more about other cultures an added bonus of global investing. The few single stocks that I plan to own for 5-10 years represent holdings that I am comfortable with in order to play what I believe are longer-term themes. Otherwise, I'm very flexible.
What symbol do you use for Jardine AND CAN YOU GET THIS FROM FIDELITY?
PRINX
Genting Singapore, with its Singapore Casino and Universal Studios Singapore is interesting, but didn't really go anywhere and I sold that and Wynn Macau (which did do well.) Or, if someone is looking for a play on cruises (not me), Genting Hong Kong owns Norwegian Cruise Lines and the (apparently) very popular Asian cruise line Star Cruises. Pink sheet shares of Genting HK are about 44 cents US, but barely trade.
Good discussion.
The nut is to be damn careful and prudent. Money can't get any cheaper, so the only direction for the FED and interest rates is Up. When this even occurs, it will result in a market setback (i.e. let's say 10%). That's OK. Stuff happens. Plan for it and deal with it.
For example, anyone without an outsized emergency fund of ready cash is being silly or on drugs. The 3-6 months worth of expenses days are over. Think 1 year. The adage about having 3 years worth of cash in retirement is insufficient. Think 5-7 years.
Cash. Ah, there's the rub. I want my 'ready money' to be no less diversified than my equity portfolio. . . or my bond portfolio . . . or, my wealth portfolio. Think about having a few K in leafs and a few in marcs. Think about having some pm's in the deposit box (e.g. some gold and silver eagles). Have a neighborhood store? Make sure you have a line of credit. Just basic CYA stuff folks.
I nibbled a bit back into pm's but it's a starting all over approach as I cashed out 3/4 of my paper holdings in the pm's. I'm still long term bullish, but I want to see that whites of their eyes. Anticipation is for catsup - not investing.
Hey, it's summer, grow some tomatoes and enjoy your family. Piss on the market.
peace,
rono