Leif Peterson

Portfolio Diversification Is Key: Consider These ETFs

>Right now investors should be loading up on US equities

The above refers to companies whose earnings have steadily increased over the last several years, increased during Sept-Oct '08, Q1, Q2 of this year, and have projected earnings growth. Why would anyone invest in companies with decreased earnings. Finding such companies involves work, and when done, the list won't include equities with large PE ratios.

Portfolio Diversification Is Key: Consider These ETFs

GLD is based on gold, which is a commodity. The price of any commodity is based on what it can be sold for. For diversification, it would be better to construct a portfolio with less volatile index and currency ETFs, whose pairwise correlations range from -1 to 1. GLD and SPY price returns are quite volatile and driven by the combination of fear, emotion, market sentiment, corporate earnings, and economic reports.

Right now investors should be loading up on US equities, while preserving assets with 10-15% GLD (or gold mutual funds), 10-15% short-term treasuries(not cash reserves), 10-15% municipal bonds (e.g. PIMCO real return bond fund). Everything is pointing to devaluation of the dollar and inflation. The one currency that has done well over the subprime mortgage crisis (market crashes last Sept'08) is the Japanese Yen (FXY). You could also invest in some dollar bear ETFs [seekingalpha.com/artic...].

China Stirs a Pot of Gold

Since hedging against inflation with gold is a form of asset preservation, how does this relate to the next bull market and its ensuing bubble? Will the increasing dividends of "depression-proof" companies with strong earnings over the last 2-3 quarters stop? Trying to understand how this relates to investing and staying ahead of inflation with high yielding dividends.

Global Market Performance: Nowhere to Hide

This is a good article reflecting the "nowhere to hide principle" in global markets. While I realize this is not a forum, has anyone published a comparison of projected inflation/recession in Europe, Japan, Singapore, Brazil, China? Also, which sectors would be doing better in Europe, Brazil?