Week Ending February 11, 2011

It’s been a while since the last post.  But things have not changed to warrant alterations in our investment stance.  Really, no change in our positioning and strategy seems needed.  Yes, stocks have gone against our cautious stance and now for a while.  But, bonds and gold have corrected.  In fact, bonds are quite oversold.  Gold corrected and has begun to bounce up again.

A veteran commenter, Richard Russell by name, has observed that U.S. stocks seem to have become the new global safe haven for stock investors.  This is a strange development.  Usually, gold, treasuries and U.S. dollar are the candidates for safe haven status.  Another interpretation is that U.S. stocks are being inflated to be the next bubble. It is dangerous to be deeply involved in bubbles at a late stage.  Global stock markets except U.S. and Europe have broken down.  Especially, emerging markets like Brazil, China and India, not to speak of Indonesia, Thailand, Turkey, etc., topped out last November and are down significantly since then.  It is anybody’s guess as to how long will the U.S. and Europe bourses will keep levitating.

Sentiment is overly bullish and insiders have been selling heavily.  We do not want to get more deeply involved in U.S. stocks than we are at this point.  We will hold all our current positions.

To recount, in the default portfolio we are equally invested in stocks, bonds, natural resources and money market.  In the trading portfolio, we are ten per cent invested in stocks, bonds and natural resources each and the rest (70%) in money markets.  For details see the previous posts.  Of course we may be missing opportunities in stocks which do not show any signs of correction.  But, given their significantly overbought status, we will rather err on the side of caution.

Good luck with your investing and pursuit of financial health and freedom.  Do not forget to stay in a solid spiritual dimension of your choice at the same time.

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About Ramesh

Ramesh started investing in 1974. He has explored widely and deeply in the world of investing through avid reading and actual practicing all manners of strategies. Investing can be a fascinating journey by itself pointing to diverse challenges and points of learning about life and world. I would like to share my ideas and practices with all investors who seek not just monetary success but learning experience through the art and business of personal investing. Achieving financial health and freedom is an important goal in life. I would add, however, that having a spiritual dimension in life is equally, if not more, important.
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