Obstacles

There was an interesting bit on the WSJ Marketbeat page about the market’s recent strength along with some bearish sounding quotes from various people. There are a few things worth understanding about current market events. I think there are some similarities to the top that was put in in 2000. The curve is inverted, the new high list is shriveling, sentiment (as casually observed) seems to be quite positive and there is not a lot of confirmation from other indices. Obviously there are differences between now and then as well. To be crystal clear I am not calling for a decline anywhere near the magnitude of earlier this decade. All I am saying is that there are some issues present today that have caused trouble in past market cycles. These troubles, last time around took months to matter. The market has overcome these problems and many others to have the run it has had and it could continue to do so but these internal issues should not be forgotten or ignored. Nor for that matter should the big macro issues be forgotten either. There is no question we have the ingredients for a decline. Ingredients however don’t bake the cake. At some point I need to think about whether my moderately defensive stance is incorrect. It makes sense to reexamine the portfolio. Perhaps a move to make would be to add another defensive consumer name, with yield, that might outperform cash. Also I am very underweight tech. I could add a little more and still be underweight. All the while I was selling tech, and getting that part right,...

More On Big Themes

My post yesterday referring to a few big themes drew some comments with other ideas for big themes. India? I can’t even find it on a map. Advances in medicine? Who needs it? Humor attempts. There were comments left noting that India and advances in medicine as big themes. Those are of course valid, while we are at it what about Russia, Turkey or maybe uranium? The ones left by readers or these other ones might all end up being better places to be than the ones I mentioned. I would not put too much into the three I mentioned. To me they are the biggies but the point of the post was for you to think about what really big themes you believe in for your portfolio, if you even think in those terms. I do. I can promise you that one of the long-term themes you believe in will test your conviction at some point. Taking a 30,000 foot view every now and then is a good idea. A reader asked me to expand on what I meant by water as a theme. Last December PowerShares came out with an ETF that focuses on companies in the water business, I wrote about the fund for TheStreet.com when it came out and have mentioned in numerous times on the blog. There are some potentially gloomy demographic issues with water, globally speaking. Growth in consumption is growing at about twice the rate of the population. There is a lot of evidence that says there will be a shortage of drinking water. This is something I buy into, I have...

Nick Knacks

I did an interview via email with Stocktickr.com that you can read here if you are so inclined. The Marketbeat page on the WSJ Online picked up my CNBC rant from earlier today along with similar sentiments from Adam Warner. I have been mulling my posts from this past weekend about having a big chunk of your portfolio in products that have almost no volatility, no short term correlation to the market but that capture not quite market equaling growth over long periods of time. As a refresher I looked at a couple of ideas that captured about 80% of the market’s growth, over a ten year period, with just a small fraction of the market’s volatility. I also mentioned keeping some of the portfolio in some specific growth themes. If I could only have three themes, I have been thinking, what would they be? While I reserve the right to change this ten minutes from now I think China, water and oil sands would be the three most important themes for me for the next ten years. We’ll see if I make to lunch time with those but seriously, thinking about what themes in your portfolio you think are most important for an extended period of time might help you manage emotion in the short term (if you are prone to emotion) when one of them struggles for a while like the way the oil sands have struggled in the last few...

Not Again

Steve Massocca from Pacific Growth Equities was just on CNBC and said the right thing. The Dow and a high close (or not) doesn’t matter. He said it is 30 stocks, it’s not the same 30, it does not matter. Bingo. The floor trader they interviewed ten minutes before the open also made fun of the network for how they handled yesterday’s action. If 3M and Altria both have a bad day-no record. Joe Kernen made a quick comment in passing when the econ segment was wrapping up; he said we aren’t cheerleading, what are we supposed to root for a hard landing? I guess why I wonder why a journalist would root for anything. The thing I find most frustrating about the channel is the time wasted covering things that don’t help anyone. The market caps of the two big American car companies adds up to $33 billion, throw in Daimler Chrysler and the entire industry (in the US) adds up to $84 billion. Perhaps market cap is not the best way to measure the impact of the group on the US economy but I don’t think the auto industry is important enough to merit as much coverage as it gets. When there is actual news they cover it but I would like to see broader coverage of more things which they do have time and personnel to do. Just an early morning rant. I need some...