My situation: Now in cash except for about 2% forex robot and 15%managed futures. Have been in GLD, TBT and DXO but out now. Mostly missed the equities rally.
Where to go: I might like to trade 10-20% but would like to move most of the portfolio into SAP or some modified version of it (I think I would go a bit higher
% on the international/emerging markets). - How to move into this portfolio? I am looking forward to your July newsletter and wonder whether Mebane Faber's
200dma could be a strategy for gradually moving into asset categories from cash? At present I think international equities and commodities are above the
200dsma - I read your June newsletter on bonds vs equities with interest and notice that your SAP has no bonds at all? or is this your equity-only portion and
actually you have a certain % of your total portfolio that is in bonds?? or do you not like bonds at all except eg Tr. bills as cash equivalent? - you do like
TIP, what about WIP? Thank you for sharing your expertise and opinionated advice!
asset allocation starting from cash?
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 eecee |
asset allocation starting from cash? |
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Posts: 2 (06/18/09 07:39:57) |
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Less Antman |
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Posts: 960 (06/18/09 16:46:39) |
Yikes! Too many questions and too little information about your situation. SAP is my personal portfolio that reflects my personal situation, and is not a
model for others to emulate. Each of my clients is invested differently than the way I am invested, because of issues unique to each of them.
As it happens, I don't have any debt securities in my portfolio. For clients with more need for short-term stability and an ability to accept lower returns, I often allocate up to 20% to TIPS, which remain the only debt securities I consider to be reasonably safe. Still, even TIPS dropped 15% last year between March and November, lost money overall in 2008, and are yet to fully recover from their peak on March 10, 2008. Bank accounts and money market funds might be best for people who need absolute certainty that the number of dollars in their account will never go down, although they're probably yielding less than the rate of inflation right now, meaning they are losing money in real terms. Keep in mind, of course, that taxable investments which beat inflation can still end up losers after the taxes are paid: I keep hearing people say TIPS are guaranteed to be profitable after inflation if held to maturity, but unless the TIPS are being held in a Roth account, that isn't true. TIPS, after taxes and inflation, face a serious risk of losing money over the next several years: the last 5-year TIPS auction provided only 1.25% in fixed yield, and if inflation averages anything above 3.22% per year over the next 5 years, those TIPS will be a real loser for an investor in the 28% federal tax bracket. I'm not wise enough to know what areas will be the best in the upcoming period, which is the reason I diversify. |
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eecee |
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Posts: 3 (06/19/09 10:06:19) |
Thanks for the answers, that is interesting about TIPs if you include tax situation. You are right, I put too many questions. So let me focus on one: How would
you move from a cash portfolio to a diversified equity portfolio? Would you use 200dma for entry points? Maybe you plan to address this in your July newsletter
on Mebane Faber system?
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Less Antman |
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Posts: 961 (06/25/09 19:55:16) |
I do plan to address the use of timing systems for initial entry into the market. Suffice to say for now that I'm not averse to using 200DMA to decide
when to get in, as long as you STAY in after that.
Still, I think it is better for do-it-yourself investors to keep it simple. If you can't go cold turkey, put in half now and commit to half 6 months from now. That way, you don't have to watch and analyze the market, which is death to patient strategies for a DIY investor. |
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