My Portfolio Distribution and Investment strategy

[masayako]

Hi my colleagues =)

Since there has been such hot debate over portfolio allocation and preparing for the ‘potential’ & ‘up-coming’ recession.

I am starting a thread so everyone can post their Portfolio Allocation and Investment strategy all in one place, here we go:

I go first:

1. Do you think U.S. is heading to a recession? Why?

>>> In my humble opinion, I think we will have soft landing which translate into buying opportunity in the stock market. I don’t think we are heading for recession. Even though the housing bubble burst, other economic sectors are still strong and PE is relatively low. I don’t see a stock bubble forming. Oil price(YoY) is not out of line enough to cause major panic. Lastly, general public aware the potential recession and, therefore, will take appropriate actions to make sure it does not happen. Bottom line: If we aware the inflation threat, we probably won’t have an inflation. Same idea: If we aware of recession threat, we are probably won’t have a recession.

2. What is your strategy for the next 3 to 5 year?

>>> Buy the sectors which I believe will continue to grow in the inflation feared market.

3. What is our portfolio allocation?
25% Gold
25% Oil/Alternative energy
25% Global bonds
25% Large cap

(Plus 2 years supply of cash for emergency fund)

4. If you have to share one investment advice to the forum, what is it going to be?
>>> Do your own research and avoid groupthink. Just because everyone think there’ll be a recession does not mean the market must be heading for a recession.

5. Recommend one investment for other forum members to look into. Why do you think it’s a good investment.

>>> Devon Energy Corp. (NYSE: DVN)
Discovered the latest and biggest oil reserve in U.S., low P/E 9.96, good cash flow and balance sheet. Don’t count my word, please do your research. =)

Best Regards,

masayako

[an]

1. No, I don’t think we’re heading for a recession. The tech sector is barely starting to recover from the 2001 crash. RE sector is shot now, but oil/gold and foreign are still doing well. Tech is starting to come back and I think will replace the RE sector in keeping this economy above water.
2. Similar to you, I will buy into sectors I think will do well in the next 3-5 years, regardless if there’s hyperinflation or a recession.
3. Cash for a big down payment.
25% Gold
40% Oil
25% Foreign large & small cap
10% Large cap
4. Always, do your own research.
5. I’ve been holding HERO for about week. Doing OK so far. I’ve been watching it and go in and out of it for a year now. It’s growing through acquisition and buying other companies’ lift boats at a discount.

[lewman]

1. 70% recession upcoming. Cause: housing slowdown -> elimination of equity as a form of ATM and direct and indirect elimination of jobs -> slowdown in consumption and as consumption is two-thirds (some say 70%) of US economy, impact would be big. What’s with the 30% reservation ? Again consumption. Despite recording the first full year of negative savings rate since the Great Depression, America continues to borrow and spend (I heard back-to-school sale is stronger than expected) and perhaps the trend could continue until it utterly collapses.

2. Start shorting the market except certain sectors but not yet because:
a) Stock market oscillates between extreme pessimism to extreme optimism as reflected both in stock price and valuation. History: latest bull run started in early 1980s but before that interest in stocks was destroyed (trough at 598 in Dec-74). To get there valuation has to go very low (PEs in single digits and yields double to triple today’s level). We’re not there yet and in my opinion we will eventually and the market may use the recession, if it happens, to push prices to that level. Plus mega trend stuff like the imminent retirement of boomers who would liquidate their stock portfolios to fund their requirements.
b) Why not yet ? There’s been much discussion about a bounce from the fall of mid-election year (2006 is one). In my previous post, I looked at SP500 charts going all the way back to the 1960s and found that to be true 100% of the time and that kind of accuracy just cannot be ignored.

3) a collection of hedge funds, gold-related investments, china, foreign currencies

4) reading investment newsletters is better than listening to famous bank analysts / economists

5) china … people here are just starting to get a taste of what money can do for them and are not afraid to work hard and sacrifice things that those of us in developed worlds cannot part with (like quality time with the family on weekends) … it’s a fundamental drive which I believe will translate to continued growth … short term I do believe that if the US slows down it will affect china but to what degree I have no idea … so advice is think long term and use techniques such as dollar cost averaging to reduce timing needs

[anxvariety]

1. Yes, the spenders are all spent.

2. Read, relax, save, invest, learn more about nature.

3. This is my current approximite invesment allocation. It has shifted alot over last 6 months, including a big reduction in gold position. Rounded to nearest 5% so not = 100%

5% Manufactured Housing
5% REIT Retail (Storage)
10% Gold bullion
10% Gold fund
5% Metal and Mineral Miners
10% Oil and Gas
5% Oil and Gas calls
5% Home Furnishing Stores puts
5% Biotechnology(SD company working on HIV vaccine)
40% Savings accounts
5% Cash on hand

4. Don’t get to confident in a conclusion… evidence can be misleading and self fullfiling when you’re choosing which to include in your research.

5. Job skills usable during a long recession.

[barnaby33]

Anx I liked number 5. I suppose what scares me so much about recession is that my father grew up in the great depression and didn’t fail to impress upon me how bad it was.

Josh

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