As I noted last night, with a deal in place, the stock futures were strongly higher. I also noted that the decision not to sell into the weakness last week was so obvious it felt as if it was wrong.

But the strong gap up and the lack of follow through is concerning. Intraday reversals such as this do not give one much confidence that a new leg upwards is beginning. If anything, it is supportive of a potential topping process for the broader market.

As such, we lightened up quite a bit on a few asset classes in our core allocation portfolios now 23.5% cash. Emerging markets, smaller cap, technology stocks, and some of the most aggressive traders were worthy jettisons today.

We still have substantial US exposure, bonds, commodities, big cap and value. I’d like to wait and see how things develop before pushing more positions out the door, given the decelerating economy and the sloppy trading in equities, the risk is clearly to the downside.

Category: Investing

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Lightening Up on Small Caps, Emerging Markets”

  1. I’m sitting at 50% cash in my gold trading position and if my oil trading position were fully built I’d be at 25% cash

  2. super_trooper says:

    BR, know when to get out.
    It sounds that you are currently trading based on your feelings.
    What are the current upsides/downsides? Sum up the vectors and go from there

  3. 4whatitsworth says:

    Today was weird but I think It’s just August and cash in the bank feels good on vacation. I have a small business and we are doing well so no dead Canaries here.

    My bet gold, oil and stocks all go higher by the end of the year. BR is your bet is that Oil/Commodities go a lot higher and hurt the emerging markets?

  4. “…Intraday reversals such as this do not give one much confidence that a new leg upwards is beginning. If anything, it is supportive of a potential topping process for the broader market…”


    keep that one in mind..

    also, why expose the majority of your Capital (to these ‘Markets’) when One can, now, more easily then ever, gain wanted Exposure through Derivatives/’Structured Products’ ?

    a la

  5. theexpertisin says:

    I noticed in the FT today that Soros’ Quantum Fund was about 75% in cash.

    Barry, thanks for periodically sharing your broad portfolio action.

  6. philipat says:

    I agree that the problem is the lack of growth in the US. Conversely, Emerging markets are where the growth is and will continue to be. And I know that markets and economies don’t necessarily converge. But why do emerging markets sell off during such times? I have always used these times to buy more EM and Asian Growth and seem to have done quite well. Of course, my investment timeline is entirely my own responsinility and is several years.

  7. Irwin Fletcher says:

    Thank you for this post.

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