Each year, I present predictions for the financial markets. Although I disrespect my own predictions as much as those of anyone else, I have some bragging rights. The coming financial year looks, to me, as influenced by political factors more than by what is strict economic, so understanding the interplay between politics and finance could be especially important.
The full megillah, complete with complimentary fuzzy plush toy tiger and crisp currency, is at MercuryRising. For people with short attention spans or a profound dislike of fuzzy plush toy tigers and crisp currency, here are the conclusions:
And so here are some investment ideas (which of course are not investment advice, since what sort of idiot gets investment advice from some guy blogging on the Internet?):
First, separate from anything to be invested, enough money (either in the bank or reasonably expected from a safe job) to ride out two more tough years, during which cashing in investments may mean eating losses. Then:
* A modest amount (perhaps 5% exposure?) in options to the downside.
* A modest amount (perhaps 5% exposure?) to metals and oil
* A modest amount (perhaps 5% exposure?) to currencies, with a judicious entry
* 40% stocks, split about evenly between the US and foreign
* 10 – 20% in fixed income, but only solid investments with, say, 6 months – 2 year horizon if there is any penalty for withdrawal or a risk of a capital loss as interest rates rise
* 25 -35 % ready to invest opportunistically
The strategy can be thought of as 22.5% two-beta, 27.5% one-beta, 45 zero-beta, 5% negative beta, but most of the zero-beta held in highly liquid form.
I look forward to your comments.
(Note: on the poll, the option that came through as garbage should read: "Al paredon!" Silly computers.)