CI Outlook - Archives

February 2011

February 4, 2011

We have been writing about the switch from bonds to stocks for quite a few months.  This is the process we have been calling the “reallocation trade”.  It appears that that influx of cash out of bonds and into stocks is now in full swing.  Not only have US stocks risen to levels not seen in some time, but the yield on medium and long treasury securities has risen quite sharply.   In an attempt to aid the markets the Federal Reserve is continuing to hold down short term rates.  But that has resulted in a lower dollar and higher inflation in emerging market countries.  As a result we have taken several actions, some of which we mentioned as possibilities in earlier letters.

Recently we sold the Frontier Markets ETF.  This proved rather prescient as the recent disturbances in North Africa have destroyed vast amounts of wealth in those smaller markets.   Today we sold the ETF’s representing our exposure to Brazil.  Although we did this very reluctantly, we did so to protect capital.  The political situation there, combined with a potential economic slowdown in the Brazilian economy, created conditions making it too risky to continue holding those positions.  If the markets there decline enough to discount that risk we will recommit to that market.  We hope to do so, as long term we believe that Brazil will grow.  However we bear in mind the volatility of the Bovespa and want to protect ourselves from it.

In combination with this reduction in overseas investments we recently bought the S&P 500 ETF.  Holding it in combination with the S&P mid capitalization ETF should give us excellent exposure to the acceleration of the “reallocation trade” here in the domestic markets.  Essentially we are following our model, combining ETF’s with investments in targeted specific stocks to take advantage of the better values offered here domestically.

We hope this explains our current investment thinking and subsequent portfolio changes.  As always we welcome the opportunity to discuss these ideas or any investment questions you may have.  Thank you for your continuing patronage.

 


July 2014
JUNE 2014
May 2014
April 2014
March 2014
Feburary 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
aPRIL 2013
March 2013
February 2013
January 2013
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
Yead End 2007
December 2007
November 2007
Third Quarter 2007
September 2007
Second Quarter 2007
June 2007
May 2007
First Quarter 2007
March 2007
February 2007
Year End 2006
December 2006
November 2006
Third Quarter 2006
September 2006
Second Quarter 2006
First Quarter 2006
Fourth Quarter 2005
Third Quarter 2005
Second Quarter 2005
First Quarter 2005
Newsletter Year End 2004
Client Newsletter 2nd Quarter 2004
First Quarter 2004
Newsletter - Year End 2003
It Ain't Over 'Till It's Over
Newsletter - 2nd Quarter 2003
Newsletter - 1st Quarter 2003
Newsletter - Year End 2002
Newsletter - 3rd Quarter 2002
Newsletter - 2nd Quarter 2002
Newsletter - 1st Quarter 2002
Newsletter - 4th Quarter 2001
Newsletter - 3rd Quarter 2001
Newsletter - 2nd Quarter 2001
Newsletter - 1st Quarter 2001
Newsletter - Year End 2000
Newsletter - 3rd Quarter 2000
Newsletter - 2nd Quarter 2000
Newsletter - 1st Quarter 2000