8/18 Portfolio Update

No changes... just a performance update...

Portfolio is performing well since we made the big changes two Fridays ago.  Year to date, we are holding on to a 2.2% gain vs. a negative 11% for the S&P 500.  Remember, defense wins championships and now is the time to be playing defense.  

There are, as always, many different opinions out there as to what is going to happen next.  Lot's of folks trying to pick a bottom... some saying its a good time to 'dollar cost average' into stocks now and some saying just ride it out.  Read my lips..  I.. do.. not.. care.. what anyone has to say on the matter.  Don't get me wrong, I listen and I am interested, I just do not make portfolio decisions based on opinion or guesses.  I have my process of tracking money flow and measuring relative strength and I am sticking to it because it works for me.  Right now... Today...  I am happy to be 50% cash, 25% metals and 25% investment grade corporate bonds and playing it safe and my portfolio is rewarding me.  If my indicators change, I'll be ready to pounce and I will tell you about any moves I plan on making.

	Jan 24, 2011	today	% Change
My Portfolio	$99,994.75	$102,196	2.20%
S and P 500	1282	1140	-11.08%
FTSE 100	5943	5092	-14.32%
Commodities Index (GSG)	33.99	32.42	-4.62%
20 Year Treasury (TLT)	92.43	110.29	19.32%

Holdings Since 8/5/2011
Cash	Type	Ticker	Weight	Shares	Starting Price	Total Starting Value	Current Price	Total Current Value	% Gain (Loss)
Money Market			50.00%			$50,306		$50,306
Bonds
Investment Grade	ETF	LQD	25.00%	222	$113.47	$25,153	$113.55	$25,171	0.07%
Commodities
			25.00%
Gold	ETF	GLD	10.00%	62	$161.25	$10,061	$177.55	$11,078	10.11%
Silver	ETF	SLV	15.00%	395	$38.23	$15,092	$39.62	$15,641	3.64%
						$100,612		$102,196	1.57%

Never forget that if you lose 50% on your portfolio, it takes a gain of 100% to recover your losses.  The name of the game is to not lose money in down markets and make as much as you can in up markets.  It is not to buy low and sell high.  Nobody wins at that game.

8/7/2011: Credit Downgrade Update

8/7/2011: Credit Downgrade Update

On Friday evening, Standard and Poor’s announced that they are downgrading the United States credit rating from AAA to AA+.  This downgrade was the first time that the US has ever lost the perfect AAA rating and it remains to be seen how pension funds, institutional investors and other large debt holders will react to the downgrade.  As of writing this on Sunday evening at 7:00 PM, DOW futures are already down nearly 300 point for Monday morning’s open, which tells us that the stock market doesn’t like it.  The worst-case scenario is really bad so I’ll keep to myself the global financial meltdown that could happen if things start to unravel. 

On the ‘bright side’ (if there is one), even though the correction will probably continue, there is still a chance that a few factors might keep this from turning into the second leg of a double dip recession or a “W” shaped recovery (note that the terminology depends if you are a glass-half empty or half full kinda thinker).   First, credit problems and budget deficit aside, US debt still remains some of the safest debt in the world and is backed by the full faith and credit of the US Government.   Second, corporate earnings and oulooks have been really good lately and cash on corporate balance sheets is at all time highs.  This gives public companies a bit more of a cushion to weather the storm that may be coming.  Finally, the credibility of the rating agencies has taken some serious criticism since the Mortgage Backed Security debacle and they just don’t carry the weight that they used to before the market collapse of 2008.

There are going to be valid arguments on both sides of the investment community in the next few months, but from my perspective, both fundamentally and technically, it is time to sit things out and watch from the sidelines.  Last Wednesday I moved money out of commodities and into investment grade corporate bonds and on Friday, after the markets rallied up about 150 points in the green from its lows of the day, I sold ALL of my holding in the ALL stock markets.  The increased volatility, the triggering of technical sell points and fundamental nightmare that has been unfolding in the past two weeks have lead me to make massive changes in my portfolio holdings. 

I am now 50% Cash, 25% Investment Grade Corporate Bonds (LQD), 25% Precious Metals (15% SLV, 10% GLD).

I am not so bearish at this point as to be shorting the market but a few more down days and that may be the case.  On a longer-term basis, the S&P is still favored over Cash, but for now, enough of my indicators have shifted to tell me to make some moves.  If Cash takes over as the official top performing asset class, I will share with you the inverse ETF’s that I like, which take advantage of down markets and I will deploy some of the 50% cash holdings there.

For now, the new portfolio looks like this:

Holdings
Cash	Type	Ticker	Weight	Shares	Starting Price	Total Starting Value	Current Price	Total Current Value	% Gain (Loss)
Money Market			50.00%			$50,306		$50,306
Bonds
Investment Grade	ETF	LQD	25.00%	222	$113.47	$25,153	$112.57	$24,954	-0.79%
Commodities
			25.00%
Gold	ETF	GLD	10.00%	62	$161.25	$10,061	$162.35	$10,130	0.68%
Silver	ETF	SLV	15.00%	395	$38.23	$15,092	$37.41	$14,768	-2.14%
						$100,612		$100,158	-0.45%

The Portfolio Scorecard to date looks like this:

	Jan 24, 2011	today	% Change
My Portfolio	$99,994.75	$100,158	0.16%
S and P 500	1282	1199	-6.47%
FTSE 100	5943	5246	-11.73%
Commodities Index (GSG)	33.99	33.06	-2.74%
20 Year Treasury (TLT)	92.43	102.46	10.85%