Sunday Morning Coffee

  Things have obviously been quite stormy in the market of late so what better time for Barron’s to interview Peter Schiff. I generally agree with him directionally but do not agree at all in terms of magnitude. The US has quite a few things to overcome, clearly, but I think the consequence of that is simply below average growth. It is too soon to know whether the idea of below normal is right or if Schiff’s idea is right. I say too early because decade long round trips to nowhere, which is all we have so far, is not unprecedented. Does anyone get any benefit from his continual pounding of the same idea? I do not. However on the rare occasion that he actually talks about stock picks, it is always very interesting and useful. The Barron’s article was about 90% sparring match which could be summed up with the following; Barrons: Wouldn’t such and such make a difference? Schiff: No it wouldn’t. Just the last little bit was about stocks and there was no depth to that part of the interview. Taking a slightly less dramatic approach to this there is precedent for and current evidence of the big boy on the block becoming a little less important a destination and a less rewarding destination. This is something I have been writing about for a while and investing around longer than that. Anyone without decent foreign exposure during this bull market has had a much harder time making this decade work for them. So we are somewhere in the middle of what I think is a normal...

Mid Morning

As you know there have been all sorts assets exhibiting heightened volatility of late. While that has been going on there have been a few things doing close to nothing which in a down 10% in five weeks world is not a bad thing. I think owning things that don’t do much makes sense in the context of a diversified portfolio but it is important to have the correct expectations for this sort of hold. One example of this might be in the currency ETFs. I have personally owned the British Pound (FXB) for a while. I bought it with a $195 handle and most of the time since I bought it has traded in the $196s or 197s–spending just a little time at $194 and all of a sudden it is at $200 now. A $5 range for a $195 product over several months is not a big range obviously. A hold like this is a cash proxy and so most of the time the recent action is what should be expected. Every so often they will have a big move. FXB was at $211 once and I expect it will move $10-$12 again at some point but those are far and few between. If you hold anything with these characteristics you are probably glad you have it now. However the next time we have a huge bull run you may become impatient which would be a mistake. A diversified portfolio should maintain some exposure to both steady eddies and hot potatoes, the balance probably needs to change over market cycles, but still some exposure to both is...

Mid Morning

As you know there have been all sorts assets exhibiting heightened volatility of late. While that has been going on there have been a few things doing close to nothing which in a down 10% in five weeks world is not a bad thing. I think owning things that don’t do much makes sense in the context of a diversified portfolio but it is important to have the correct expectations for this sort of hold. One example of this might be in the currency ETFs. I have personally owned the British Pound (FXB) for a while. I bought it with a $195 handle and most of the time since I bought it has traded in the $196s or 197s–spending just a little time at $194 and all of a sudden it is at $200 now. A $5 range for a $195 product over several months is not a big range obviously. A hold like this is a cash proxy and so most of the time the recent action is what should be expected. Every so often they will have a big move. FXB was at $211 once and I expect it will move $10-$12 again at some point but those are far and few between. If you hold anything with these characteristics you are probably glad you have it now. However the next time we have a huge bull run you may become impatient which would be a mistake. A diversified portfolio should maintain some exposure to both steady eddies and hot potatoes, the balance probably needs to change over market cycles, but still some exposure to both is...