My Current Investment Strategy...

Posted by: Michael Mandel on October 08

..if anyone is interested (as usual). I’m keeping my allocation roughly 50-50 between domestic and foreign equities on the one hand, and short-term money markets, Treasury bond funds and the like on the other. Incremental savings—401k and the like—are going into an S&P500 index fund.


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Reader Comments

Brandon W

October 8, 2008 12:52 PM

I think there's a supreme investment opportunity in a business that makes safes that fit nicely under a bed.

mark

October 8, 2008 08:08 PM

you sir, still have equity... so is your equity allocation now higher than in 2007?

Rycoka

October 9, 2008 06:58 AM

Hi All,
I got my superannuation statement today which told me about the losses my fund had made in the last financial year (July to June in Australia) and it made me wonder if I haven't been suffering from a fundamental philosophical misunderstanding about money.
I have always considered money to be a thing, something that has extrinsic value. However, I am now starting to come to the view that money is really only symbolic; an indicator of a fundamental capability to either grab and hold, or in a more positive sense, an indicator of the trust society has in an individual's or corporation's ability to contribute to an economy.
People who roughly spend what they earn (pick me for that one) play no real part in the whole deal, and the superannuation (401K) we are forced to "invest" in is probably more like a pointless tax paid by the clueless, administered by the stupid and ultimately snapped up by those who know better. Pension funds seem to be the herd animals of the economy, existing only to be fleeced of their dumb investor's funds by those who have the power and the know-how to make a dollar really work (hardly your average pension fund administrator). Putting something aside only really works if you are saving for a personal "rainy day" and these days insurance probably works better than saving for that kind of thing. On this basis the current world financial situation is one where the herd animals are being "rounded up" for slaughter. Nothing terrible or unnatural, not the great depression, just the natural result of a lot of cashed up nongs wondering around with their wallets sticking out of their back pockets.
Bottom line - systemic "saving" is an illusion. Increasing the productivity of individuals and having a compassionate system around for the gentle redistribution of wealth makes sense. Pay a decent amount of tax, elect a government that you think might purchase useful social goods and make sure the average people are looked after, and hope your children do the same.
Alternatively, I suppose you can swim with the sharks in the land of money. Not necessarily a bad thing, just not something I think everyone should have to be involved in.

Rycoka

October 9, 2008 07:48 AM

A couple of other thoughts:
Good with money = a good understanding of risk. Other herd animals may include sovereign wealth funds, semi-privatised enterprises (eg Fannie and Freddie) and traditional banks.

Jim D

October 9, 2008 02:20 PM

And I'm short the market in my 401k, though I'm in cash in my trading account.

We'll see a bounce here soon (unless things completely fall apart) - maybe even up to 1100 (though that gets less likely by the day), but we'll hit S&P 500 @ 900 before this is over, and will probably see something below 800, once earning season is really starting to beat on investors.

I'll evaluate my postion at 900, and again at 800. And when I move out, it'll be to treasuries, not money markets - unless the credit market starts to free up again.

Equities won't be a good investment for while still - remember how cheap everything looked at the start of the NASDAQ crash? Then they went even lower.

The secret to long term investing is to miss out on big drops - not try to knife catch a big bounce. Missed opportunities can be made up much more readily than big losses. I missed a big opportunity in 2006-2007 - but kept my money for the last year. I'm happy with that trade off.

Hey Karthik, you still liking that trade you talked about last month? Oh, where have all Karthik and all the other bulls gone who said we weren't in a recession?

When the 200 day moving average is *below* the 50, it *might* be time to think about a return to a bull market. It ain't nearly there yet.

Tom

October 9, 2008 04:19 PM

I think this is a great time to load up on the gun manufacturers, as everyone's going to be buying up guns to protect themselves at home to defend against the thieving hordes who lost everything in this market.

Colin

October 9, 2008 05:23 PM

Long time lurker here and I really enjoy the debates and discussions here.

As far as positioning, I'm all out in cash. Moved out of equities in May due to the technical and macro picture of the economy (Thanks to everyone here).

I did short the NASDAQ about 3 days ago (trading) and was cashed out today due to the extreme run in the last few min.

Mike Mandel

October 9, 2008 05:32 PM

Mark--

I reduced my equity allocation substantially in December 2007..so yes, it is lower.


Jim D
>Equities won't be a good investment >for while still - remember how cheap >everything looked at the start of the >NASDAQ crash? Then they went even lower.

Yes, that's a good principle to keep in mind. Things can always go lower than you think.

Rycoka

October 10, 2008 04:40 AM

Here's a question: Why are governments so keen to protect those who have removed the money from the productive system (equities) and into cash? Surely many of these people are the ones who made out like bandits in the recent weird economic climate and are now trying to hide from the results of the climate that generated their wealth.

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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