Friday, January 13, 2006

Portfolio analysis: AM accounts January 2006

The initial portfolio can be found in this post.

The table and chart blow shows the allocation within the actively managed funds, as well as within the total portfolio. I have included here physical bullion which will be the subject of another post. Being aware of the sector concentration is a good risk management practice even though I don’t have a steadfast maximum on any single sector. Being 30% in the precious metal (PM) equities currently however, does heighten the senses tremendously that I’m ready to pull the sell trigger at any technical topping signal. While we are still on the topic, I’ll say that for now the pull backs in this sector have been shallow and there is a real chance the $HUI (currently at 310) will spike up to 350-390.

A quick glance at the next chart (courtesy Contrayinvestor) on the current sector weighting in the S&P 500 shows that next to the PM sector, I’m overweighting energy and other commodities and not much else. There is no truer reflection of my conviction of the commodity story, driven largely by China and India, will play out for the rest of the decade and beyond. This, my dear readers, will be a prominent theme of this blog.

“Company stock 1” is stocks in my current employer. The name is hidden for obvious reasons. It’s a technology company and the stocks were awarded as part of my compensation. I’m planning to scale back that position by half in the coming months. Astute readers must have noticed that I own no other tech stocks, darlings of investors and traders alike. One reason is that being contrarian at heart, I’m reluctant to chase the high flyers like Google or Apple. The other has to do with the “triple water fall” concept popularized by Don Coxe in his book The New Reality of Wall Street.The gist of the idea is that the decline from any bubble including the NASDAQ bubble will take three long and painful stages, of which we have only experienced one. However, like any concept and assumptions, this one needs constant re-examination as well. When the NAS corrects again, and I can guarantee that it will, it will be time to make some considered forays into this space again.

Next time we’ll take a similar look at the asset allocated funds.

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