Where are you putting your investment $$$ ??

[stansd]

40% international stocks
30% Treasury inflation protected securities (TIPS)
10% US Stocks
20% in the money options in the company I work for (High Tech).

Stan

[stansd]

40% international stocks
30% Treasury inflation protected securities (TIPS)
10% US Stocks
20% in the money options in the company I work for (High Tech).

Stan

[Daniel]

I’m well aware of Rich’s views on this. I happen to disagree with him on this one.

PS: incidentally, I’m not claiming that gold is in a “bubble”. My claim goes even deeper, that gold does not even qualify as an investment. It’s simply a hedge in case terrible things happen. Investments are things that produce cash flows. Gold does not.

[Daniel]

I’m well aware of Rich’s views on this. I happen to disagree with him on this one.

PS: incidentally, I’m not claiming that gold is in a “bubble”. My claim goes even deeper, that gold does not even qualify as an investment. It’s simply a hedge in case terrible things happen. Investments are things that produce cash flows. Gold does not.

[patientrenter]

I just made a big long post on this that got lost in cyber-space, so here’s the short version:

1. About 50 mostly high-dividend stocks*.

Spread across the world, industries, company sizes… Examples: Israel high-tech, Chile pension fund mgmt, Russia mining, Aussie pearls, Singapore stocbroker, Finnish paper, UK water, China oil, China coal power, China utility, UK tobacco… Because they dominate high-div stocks, I have a lot of banks, but I tried to spread the bank risk across different countries, bank sizes, and I avoided high residential mortgage banks (except for National City – I missed their big res mortg sub in the disclosures). In the US, I have low-leverage medical REIT, infrastructure, venture capital, theme parks…

2. Two Vanguard index funds – the most diversified domestic and foreign ones.

3. Cash for the purchase of a home some time in the next 5 years

4. 401k’s mostly in cash

I bought Yen/dollar futures in June, but am out now. I am considering yen/euro futures, but don’t feel they’re fully ripe yet. The Euro is sharply overvalued on a consumer buying power basis, and the yen is slightly under. I see the dollar as too fragile to bet on against the Euro, but I think the yen is resilient.

*I’m unhappy only 1/4 of the time that way, when the stocks go down AND the dividend goes down.

Patient renter in OC

[patientrenter]

I just made a big long post on this that got lost in cyber-space, so here’s the short version:

1. About 50 mostly high-dividend stocks*.

Spread across the world, industries, company sizes… Examples: Israel high-tech, Chile pension fund mgmt, Russia mining, Aussie pearls, Singapore stocbroker, Finnish paper, UK water, China oil, China coal power, China utility, UK tobacco… Because they dominate high-div stocks, I have a lot of banks, but I tried to spread the bank risk across different countries, bank sizes, and I avoided high residential mortgage banks (except for National City – I missed their big res mortg sub in the disclosures). In the US, I have low-leverage medical REIT, infrastructure, venture capital, theme parks…

2. Two Vanguard index funds – the most diversified domestic and foreign ones.

3. Cash for the purchase of a home some time in the next 5 years

4. 401k’s mostly in cash

I bought Yen/dollar futures in June, but am out now. I am considering yen/euro futures, but don’t feel they’re fully ripe yet. The Euro is sharply overvalued on a consumer buying power basis, and the yen is slightly under. I see the dollar as too fragile to bet on against the Euro, but I think the yen is resilient.

*I’m unhappy only 1/4 of the time that way, when the stocks go down AND the dividend goes down.

Patient renter in OC

[Rich Toscano]

Hi Contrarian — Thanks for the compliment. Unfortunately I am not able to easily engage in back and forth discussions on securities or anything security-like (eg gold) –boring details of why are at this post.

I can however point you to some stuff I’ve previously written on gold here in these two comments

http://piggington.com/gold_is_a_bubble#comment-48413

http://piggington.com/gold_is_a_bubble#comment-49544

I can also talk about people, so I can say that I am not a big fan of Fisher. I think he’s done some very interesting work on the behavioral finance side of things (I have not yet read his book but it’s on my shelf and I intend to). That said he loses major points for having continuously and stridently denied the existence of the housing bubble throughout. For instance, a quick googling comes up with this utterly misguided Forbes article by Ken Fisher, Feb 26 2007:

Don’t buy it. For months now the debate has been over whether America will have a hard landing or soft landing, the answer hinging on how big 2007’s housing disaster turns out to be. Well, there won’t be any housing disaster. We won’t have a landing at all, soft or hard. Right now the U.S. and global economies are both accelerating.

You can see right through the housing crash story by looking at the prices of housing stocks. The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback. In the last six months housing stocks are up 24%, well ahead of the overall market. If housing were destined to fall apart in 2007 these stocks wouldn’t be so strong now.

What’s happened since those words were written provides commentary enough so I won’t add to it.

I’ve got some other thoughts on what you wrote, some in agreement and some in disagreement, but that would get more into the kind of stuff I’d have to get approved so I will leave it at that. As always anyone is welcome to email me at [email protected].

Thanks,

Rich

[Rich Toscano]

Hi Contrarian — Thanks for the compliment. Unfortunately I am not able to easily engage in back and forth discussions on securities or anything security-like (eg gold) –boring details of why are at this post.

I can however point you to some stuff I’ve previously written on gold here in these two comments

http://piggington.com/gold_is_a_bubble#comment-48413

http://piggington.com/gold_is_a_bubble#comment-49544

I can also talk about people, so I can say that I am not a big fan of Fisher. I think he’s done some very interesting work on the behavioral finance side of things (I have not yet read his book but it’s on my shelf and I intend to). That said he loses major points for having continuously and stridently denied the existence of the housing bubble throughout. For instance, a quick googling comes up with this utterly misguided Forbes article by Ken Fisher, Feb 26 2007:

Don’t buy it. For months now the debate has been over whether America will have a hard landing or soft landing, the answer hinging on how big 2007’s housing disaster turns out to be. Well, there won’t be any housing disaster. We won’t have a landing at all, soft or hard. Right now the U.S. and global economies are both accelerating.

You can see right through the housing crash story by looking at the prices of housing stocks. The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback. In the last six months housing stocks are up 24%, well ahead of the overall market. If housing were destined to fall apart in 2007 these stocks wouldn’t be so strong now.

What’s happened since those words were written provides commentary enough so I won’t add to it.

I’ve got some other thoughts on what you wrote, some in agreement and some in disagreement, but that would get more into the kind of stuff I’d have to get approved so I will leave it at that. As always anyone is welcome to email me at [email protected].

Thanks,

Rich

[SD Realtor]

FLU I have been pretty happy with Broadcom lately.

SD Realtor

[SD Realtor]

FLU I have been pretty happy with Broadcom lately.

SD Realtor

[Eugene]

Stock market is a zero sum game. Close to it, anyway. Dividend paying stocks are okay, anything else is prone to bubbles.

It’s the same story as with houses. Long term houses are good investments but it does not mean that you should drop everything and buy a house in Carmel Valley. Long term, stocks are even better investments. With any bubble, if you get in at the peak, you stand to lose much more (and faster) than you stand to gain from normal growth of the asset.

Right now there are bubbles of varying degrees in most foreign stock markets. Shanghai composite index is up 6x in two years. Is that because of world economy growth?

Currencies are _not_ good investments long term. They are temporary solutions when you think that market correction is likely. Euro CDs and bonds give you guaranteed 5% a year. Stock markets historically give 10% on average. In any given year they might give you 20% and might give you -25%. Given deflating global housing bubble, credit problems, and American consumers rapidly running out of money, which one do you think is more likely?

Myself I’m mostly in cash, gold, and TIPS, with a few speculative bets against the American consumer (SCC, retailer put options). My expectations include continued dollar decline, falling discretionary consumer spending during the winter gradually developing into recession, eventually second round of credit crunch, this time driven by mass defaults in Prime/Alt-A sectors. When the dust settles, time will come to buy a house and move into stocks.

[Eugene]

Stock market is a zero sum game. Close to it, anyway. Dividend paying stocks are okay, anything else is prone to bubbles.

It’s the same story as with houses. Long term houses are good investments but it does not mean that you should drop everything and buy a house in Carmel Valley. Long term, stocks are even better investments. With any bubble, if you get in at the peak, you stand to lose much more (and faster) than you stand to gain from normal growth of the asset.

Right now there are bubbles of varying degrees in most foreign stock markets. Shanghai composite index is up 6x in two years. Is that because of world economy growth?

Currencies are _not_ good investments long term. They are temporary solutions when you think that market correction is likely. Euro CDs and bonds give you guaranteed 5% a year. Stock markets historically give 10% on average. In any given year they might give you 20% and might give you -25%. Given deflating global housing bubble, credit problems, and American consumers rapidly running out of money, which one do you think is more likely?

Myself I’m mostly in cash, gold, and TIPS, with a few speculative bets against the American consumer (SCC, retailer put options). My expectations include continued dollar decline, falling discretionary consumer spending during the winter gradually developing into recession, eventually second round of credit crunch, this time driven by mass defaults in Prime/Alt-A sectors. When the dust settles, time will come to buy a house and move into stocks.

[Coronita]

SD R,

 

Yes BRCM seems to be a winner, except with all the lawsuits against QCOM, buying it would be going against several friends and family I know.

I've been pretty happy with Intel, Nokia, Yahoo, HP…especially after finding out that they didn't puke on earnings. I've also been happy with BEA, Motorola, and just about everything else Icahn is trying to pump and dump, or slice and dice. Unfortunately, party isn't going to go on forever some I'm unloading some this week.

I'm thinking of getting into enterprise storage tech/failover technology such as NetworkAppliance, EMC. Namely because I'm seeing a lot of demand for some of these products, as more and more software companies start moving to the SAAS business models (software as a service) and grid computing. The storage needs, fault tolerance, failover, etc is reaching beyond anything I've seen before, as companies are hosting and cramming more and more stuff into services. Unfortunately, these storage tech companies i think are already pretty expensive, so I've been patiently waiting (and unfortunately watching these go up and up.) The only two I don't like is Veritas because it's now part of Symantec and VMWave which is ridiculously priced. My company pretty much uses every one of these companies, and my peers in the industry have been seeing similar buying trends. Some of our tech budgets have been going up for awhile.

But what do I know. I'm just fat and lazy 🙂

 One funny thing. I've been reading a lot about analysts talking about BEA and how they think there will be a competing offer more than Oracle. I sort of chuckled at some of the potential bidders.

 

1) IBM: uh, unless they are going to buy BEA to shut them down, I doubt it. IBM has websphere.

2) SUN: uh, they are moving to an open source model and have glassfish. Uh, doubt that.

3) SAP: possible, especially with the weak dollar. Still, don't think SAP wants to move into markets where things are commoditized.

4) HP,CA,EMC,CSCO: doubt it. Doesn't make sense. Software suite is different space.

My opinion, ORCL will be the only suitor. Final answer.

 

But what do I know. I'm just fat and lazy 🙂

 

 

 

[Coronita]

SD R,

 

Yes BRCM seems to be a winner, except with all the lawsuits against QCOM, buying it would be going against several friends and family I know.

I've been pretty happy with Intel, Nokia, Yahoo, HP…especially after finding out that they didn't puke on earnings. I've also been happy with BEA, Motorola, and just about everything else Icahn is trying to pump and dump, or slice and dice. Unfortunately, party isn't going to go on forever some I'm unloading some this week.

I'm thinking of getting into enterprise storage tech/failover technology such as NetworkAppliance, EMC. Namely because I'm seeing a lot of demand for some of these products, as more and more software companies start moving to the SAAS business models (software as a service) and grid computing. The storage needs, fault tolerance, failover, etc is reaching beyond anything I've seen before, as companies are hosting and cramming more and more stuff into services. Unfortunately, these storage tech companies i think are already pretty expensive, so I've been patiently waiting (and unfortunately watching these go up and up.) The only two I don't like is Veritas because it's now part of Symantec and VMWave which is ridiculously priced. My company pretty much uses every one of these companies, and my peers in the industry have been seeing similar buying trends. Some of our tech budgets have been going up for awhile.

But what do I know. I'm just fat and lazy 🙂

 One funny thing. I've been reading a lot about analysts talking about BEA and how they think there will be a competing offer more than Oracle. I sort of chuckled at some of the potential bidders.

 

1) IBM: uh, unless they are going to buy BEA to shut them down, I doubt it. IBM has websphere.

2) SUN: uh, they are moving to an open source model and have glassfish. Uh, doubt that.

3) SAP: possible, especially with the weak dollar. Still, don't think SAP wants to move into markets where things are commoditized.

4) HP,CA,EMC,CSCO: doubt it. Doesn't make sense. Software suite is different space.

My opinion, ORCL will be the only suitor. Final answer.

 

But what do I know. I'm just fat and lazy 🙂

 

 

 

[Running Bear]

coop,

If you want to take advantage of being out of the dollar and in other foreign currencies you can in several ETFs. FXY, FXB, FXE etc. They pay a dividend based off of the interest rate of their central banks.

As far as where to put your money I would recommend asking yourself some questions, doing some research, then base your investments off of that so you can sleep at night.

1. What do you see for the future of the US economy? If you are on this board I assume you are negative on the housing market. How do you think this will impact the US consumer? They are 66% of US GDP.

2. How do you think Helicopter Ben will react to a slowing US economy? How do you think this will impact the dollar?

3. If you look at and research emerging markets do you think their near vertical rises are sustainable? Most of the graphs look like vertical lines.

4. Where do you see the US stock market headed? Take a look at the drop in foreign investment in our market and what impact do you think that will have.

5. Commercial Paper markets backed by loans are in free fall. Without the free flow of easy credit and cash what effect do you think this will have on asset values in the future?

As you can tell by my name I am very negative on many of these things. I like the Yen because it has been so undervalued for a long time by the BOJ. I don’t think they will be able to keep their current interest rate forever and will be forced to raise rates as china exports inflation to the world. The other event that will help the Yen is the unwinding of the Yen carry trade. If you watched the Yen when the market took its 10% shave the yen got dramatically stronger. This will happen again when our market drops.

I could talk for hours on my investment philosophy and why I am doing what I am doing. However, I am just one voice in the crowd. I do much of my own research and also subscribe to a variety of investment letters to help get other perspectives on the investments I am doing. The bottom line is you need to invest in such a way that allows you to sleep at night. Right now getting a 4% return on the Euro is much better then a 5% return from the dollar along with a 35% drop against the Euro over the last 6 years. In just this year alone the dollar has lost 7+% against the Euro. Having just returned from Zurich, it is eye opening just how little the dollar buys in Europe. For the longest time this has been masked by China exporting every cheaper goods. Starting just this year the export prices in China are on the rise. Americans in the coming month are going to fully understand the impact of the falling dollar.

Just an FYI on commodities, China plans to spend a large percentage of their 200 billion SWF on commodities, infrastructure and private equity.

Good luck with your investments. I hope I was able to give you some positive feedback.

[Author]

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