I did a long interview with Wally Forbes where we get into some of the details of how we manage assets and what we currently own.

Here’s an excerpt:

“We find ourselves fairly fully invested. We pretty much run a 70/30 asset allocation portfolio which is more or less 70% equities, 30% fixed income plus other asset classes [REITs Commodities]. And we’re pretty fairly invested and have been for a few months only because reading the charts, looking at the winds, looking at skies, checking the tide tables, looking at the phase of the moon, looking at all these different factors, the Fed is telling you they are going to squeeze equities higher.

What I think is best for the country, what I hope happens, what I want to happen – all those things are irrelevant.

The bottom line is that the Fed has made it clear that they’re not tolerating a drop in equity assets.  And so the Bernanke “put” is alive and well and the way we’re participating in that is through a combination of domestic and emerging market equities.  We like growth, we like value – especially Mid-cap growth and large-cap value. We own lots of dividend payers. And we have a decent exposure to energy, healthcare, and biotech, which is a sort of unusual combination because you wouldn’t expect all of those things to run at the same time.  But they have been.”

You can read the entire interview — including ETF and stock selections that we are currently holding — here.

Note that I always talk about what we own, not what you should run out and buy . . .
 

 

Source:
Taking Added Advantage Of Reality: Johnson & Johnson, Pfizer, Qualcomm, Visa, Berkshire Hathaway
Wallace Forbes
Forbes 2/22/2013  
http://www.forbes.com/sites/wallaceforbes/2013/02/22/taking-added-advantage-of-reality-johnson-johnson-pfizer-qualcomm-visa-berkshire-hathaway/

Category: Investing, Media

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 “Taking Added Advantage Of Reality”

  1. MaxMax says:

    Great interview with a good overview of the market. Tx.

  2. MayorQuimby says:

    I have made approximately 30 trades (equities and fixed) in the past 18 months. I have not had one losing trade.

    One would think I am excited about this.

    It is actually the opposite. When making money is this easy, something is *seriously* wrong.

    I truly fear for the future and think major problems cometh. I’d rather we get them over with than delay the inevitable. The Bernanke put is alive but for how long? I think the rush to the exits when easing becomes detrimental to the economy will be BREATHTAKING!

  3. RW says:

    Despite a number of similarities, some of which are doubtless spurious, Bernanke is no Greenspan IMO; e.g., it is extremely unlikely he is targeting equities, he is targeting interest rates and possibly NGDP (and unemployment, hallelujah) with the goal of increasing economic growth.

    That is, if people really believe the Fed will tolerate higher inflation they are more likely to actually deploy horded cash; e.g., Don’t Dismiss the Communications Value of QE.

    Equities do respond positively to additional liquidity of course just as bonds respond positively to economic doldrums (and/or a shortage of safe assets) but if you believe the former is Bernanke’s primary goal you are likely to persist buying after the FOMC decides the corner has been turned and tightens the throttle, ignoring equities all the while.

    NB: This would all go a lot better if a feckless Washington D.C. was helping with fiscal expansion to reduce deficit with growth rather than cuts but that is the penalty the country must pay for listening to plutocrats and one-note fools too long — Beltway CW still thinks putting the cart before the horse is the ‘serious’ thing to do — and frankly it is a penalty for innumeracy: forgetting (or never knowing) there is a denominator as well as a numerator in the national debt equation.

  4. JDenver says:

    Enjoyed it. Especially liked this… “Since it is apparent the Fed’s not letting that happen, rather than whine about their policy, my job is to adapt to what they are actually doing – not manage towards how they should be running monetary policy.” Easily forgotten or ignored.

  5. Pantmaker says:

    The concept of the “Bernanke put” is a little bit like believing in Santa Claus. Both constructs are difficult to refute because the facts on the ground seem to support the existence of both. Kid goes to sleep…visions of Sugarplums dance in his head…he wakes up on Christmas morning and his tree is magically surrounded with presents. Must be Santa…heck he even ate the cookies that were left out for him…the kid is a believer.

    Bernanke’s hand seems to be having an equally magical effect on the equities market. This notion that he is “printing money” that is used as fuel to raise the level of the stock market seems to be a popular one. Bernanke has placed lumps of coal in the stockings of many fixed income portfolios by intentionally lowering interest rates through ZIRP. In search of higher returns, individuals and institutions have bid up equity prices to the levels we are now seeing. Not only has he “decked the halls” with crappy rates of return for fixed income, he has also spooked the reindeer herd into equally crappy expected rates of return for their equity holdings going forward.

    I have three kids under the age of 7 and I would be happier than a puppy with two peters if I got a break next Christmas from my usual midnight assembly line, putting together all of the toys for “Santa’s sleigh.” Maybe Bernanke can swing by the house and lend me a hand.

  6. theexpertisin says:

    Nice read. Nice to observe a sophisticated fellow taking a truly common sense approach to investing.

    It ain’t rocket science, and the research behind intelligent ETF selections for broad based indexes as a portfolio foundation is compelling.

  7. hangemhi says:

    So no stop losses on your ETFs?

    ~~~

    BR: Its more nuanced than that. You put stops on individual stocks, you rebalance asset classes (and the ETFs that are representative of them)

    Once a decade, when a freight train is coming down, and lots of factors line up, you get off the tracks.

  8. MikeNY says:

    RW –

    Of course Bernanke says he’s aiming at higher economic growth. The question is, what levers does he have? Interest rates, QE, and talk. What is the effect of lower interest rates and QE? Higher asset prices. How do higher asset prices translate into economic growth? Primarily via the wealth effect.

    My conclusion is, therefore, that Bernanke is targeting higher asset prices. In the process, he will exacerbate the wealth inequality in America due to the already obscenely skewed distribution of wealth.

    I have sympathy for the man; he, and we, are in an economic pickle. But I expect this experiment to end badly, again. The normal purgative “creative destruction” in the economy is being stoppered. But in the end, it will out … as it were. Of course, that could be years away.

    Stephen Roach is right, that the Fed needs a third mandate: to avoid, preempt, asset bubbles.

  9. RW says:

    MikeNY,

    I understand your argument and do not disagree that equity prices might help Bernanke’s project if the ‘wealth effect’ translates into releasing larger quantities of cash into productive uses but the equity markets are (a) much too small to give the necessary traction otherwise and (b) also introduce the possibility of a different tool for hording (no net increase in money velocity) so I do disagree with any interpretation that Bernanke regards equity prices as a primary target for QE; I think those who believe otherwise will get blindsided.

  10. Shaq Fu says:

    great interview. nice of you to throw circuit city’s name in their for old time sakes.

    ~~~

    BR: heh heh A reminder to stock pickers . . .