ANTS

Commodities: On the Downhill Slope?

I handle the allocation question by reference to a risk reward ratio, similar to say a Sharpe ratio or Sortino ratio. Six months ago these ratio's implied to me that the resources area was favorable and deserved a higher allocation. While the outlook for commodities probably hasn't changed that much, the stock market risk/reward structure has, and it is appropriate to scale back the allocation to resources until these ratio's become acceptable.

The other thing is the psychology of seeing stocks fall 10% in one day and recover 6% the next day. It is very very hard to maintain investment discipline while moves of this magnitude occur on a regular basis, and I would rather have my mind (and pocket) free of the distraction.

Lufkin Industries Up as Oil Prices Surge

I run a quant based stock picking system, and just to let you know you are not alone, it identified this stock as a good buy on the basis of a favorable risk/reward metric.

I run the data on all companies in an index, so I don't know what the market thinks of it. Then again, listening to the market chatter is more likely to hinder a decision to invest rather than to assist.

It will be in my portfolio today, and I'm sorry I didn't find it sooner.