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Background on Soos Global's Market View & Portfolio Positioning

|Includes: Citigroup Inc. (C)

As part of Soos Global's recent introduction onto, over the next few Instablogs, I plan on sharing some background as to what broad economic and geopolitical themes have been driving my investment decisions in the past year, as well as some key portfolio moves that I've made and how I'm currently positioned.

By way of background, since Soos Global's inception at the start of this year, I've been positioning the portfolio to reflect the following:

  • Global economic growth is underway, especially in Emerging nations, resulting in increased demand for resources, energy, metals, machinery and equipment.
  • A key focus throughout the past 18 months has been on "political will" likely are political leaders to implement policies that will keep economies growing and help avoid a re-visit to the abyss that we saw in '08.  In general, that political will has been sufficiently present in the US in '09, in the Europe most recently in the context of the Greece (and the other PIIGS) meltdown, in China's prudent attempt to avoid a bursting bubble, and in many other nations that have taken steps to either stimulate or to slow growth as appropriate.
  • That said, US 'political will' is currently in question!  With most economic signals pointing to a meaningful US economic slowdown, Washington has been increasingly perceived by business leaders (across both sides of the political aisle and across many industry segments) as not doing enough to create jobs and in setting a business-unfriendly environment in which to operate.  There's hope, however cynical, that post-Labor Day, that will change, and that with Election Day in sight, at a minimum, rhetoric will be forthcoming that focuses on job creation (read: vote getting) which should be market positive.
  • Markets in general have not been 'trending'....rather, they've been choppy, with 'big up' and 'big down' days.  I've been adding to equity exposure on the dips, targeting companies that have global businesses, strong balance sheets, proven management and leadership market positions in their space.
  • I've been adding to EM exposure in non-Japan Asia, China, India, Brazil and broadly diversified baskets of EM countries.  In addition, I've added to resource-relevant countries such as Australia and Canada.
  • Fixed Income too has been a key part of the portfolio in the past year with an emphasis on ETF's that track investment grade corporate bonds in the short to intermediate maturities and high-yield bonds in longer maturities.  (as a rule, I invest in individual stocks, bonds and etf's, and only use mutual funds in rare occasions for asset classes or sectors that are more efficiently accessed in that way and that justify the mutual funds' generally higher cost and less flexible liquidity).  In addition to the strong rally that fixed income has had this year, it's general negative correlation to most equities has provided a good overall portfolio impact on risk/return.  (I am quite negative on Muni's...more on that in coming Instablogs).
  • Finally, commodities have played an important role in the portfolio, though increasingly I prefer to express my commodity view through companies or countries that prosper from them, rather than use ETF's that often don't track well or have too much embedded costs especially if they're not hard asset buyers but rather use futures contracts.
  • As for positioning, I've already mentioned that I've taken advantage of 'big down' days to add to positions.  So far, earlier in 2010, I had taken my equity exposure up to close to 70%, fixed income to 20% and cash 10%.  As we entered the Spring and markets were greeted with daily footage of the Greece riots, we had entered a period of market sentiment that was as negative as I've experienced since the near free-fall of Citigroup (my alma mater).  In that context, I did an unusual amount of liquidation and cash raising, bringing my equity exposure down to 35%.  In the past 2 months, I've been patiently putting cash back to work, and currently have equities at close to 50%.  Again, my Cash position is unusually high, but I'm quite comfortable having the cash on hand to tap seemingly good values as markets react (or more likely, over-react) to economic data.
  • In coming Instablogs, I'll be more specific on my existing portfolio positions and on targeted entry levels for additional assets.
I hope this provided a good background and I'd welcome constructive feedback and comments.
As always, please read IMPORTANT DISCLOSURE INFORMATION by hitting the following link to the "Soos Global Capital's Company" section of the Profile page .

More later...

Disclosure: Long: C, ETFs tracking Australia, Canada, diversified EM, BRICs, non-Japan Asia, corporate bonds, and high yield bonds.