John Heneghan

How I Use ETFs To Capture Sectors and 'Secondary Effects'

Roger,

Thanks for this interesting post about portfolio construction and sector allocations in which you use the S & P 500 as the benchmark. At the other extreme, there was an interview in Barron's this week with David Richards, former money manager at Capital Research & Management and PrimeCap.

The article indicated that "Richards is braced for calamity." He is anticipating rising inflation and an uptick in short rates which could create a financial crisis. His long portfolio is 50% oil, 30% gold, 11% Microsoft, 4% Berkshire Hathaway and 3.5% Russia.

I viewed Richard's portfolio as "betting for calamity" more than "bracing" for such potential risks. I would be interested in your thoughts on Richard's contrarian economic forecasts and portfolio construction.