Allocation revisited.
This is my allocation. On Friday, it didn’t add to 100%. Now it does.
Real estate (at cost) 24.7%
Cash 14.2%
Bonds 7.5%
Stocks and stock funds 15.5%
Private equity — startups etc. 8.0%
Leveraged buyout fund 2.1%
Personal real estate 28.0%
I got criticized because I write about stocks (inter alia) and have so “little” invested in them.
Allocation is for three reasons:
1. It determines your long-term success.
2. It helps you sleep at night.
3. It stops you going broke when things go awry.
There are no “rules,” (except don’t borrow to buy stocks). Wall Street makes up allocation rules based on your age. But they’re meaningless when bonds pay so little (like today). Imagine if 73% of my portfolio were in bonds. (I’m 73.)
Here’s one reader’s allocation:
Stocks and hedge funds 10%
Cash 10%
Other 5%
Personal real estate 5%
Commercial real estate 70%
His portfolio is skewed to real estate, because that’s the business he’s in. He buys, sells and develops real estate. He does it well — far better than his stocks or his hedge funds.
Mine used to be 70% in the business I was in — publishing. Now I only have a little “publishing” — namely my dictionary and it’s small. But it is something I have some control over.
I don’t feel comfortable at present increasing my allocation toward stocks. Too many bad things are happening overseas. We know about Russia, Brazil and China. … Now I read about two more oil exporters being in trouble — Canada and Mexico. All our big listed corporations have exposure to these countries. That worries me.
There is also talk of the S&P 500 repeating the same pattern that caused the big decline a few weeks ago.
Apple is up today. My BHP short is making a little money. But look at the mess in Brazil. PBR is their largest oil company, totally riddled with corruption. Remember when I recommended shorting it? It was way above where it is now:
Retooling the Fed for Liftoff. I suspect the Fed’s 25 basis point upcoming rate hike will be a non-event — when it happens. For now, it’s spooking markets. Anticipation is always better than realization. (Or did they say that about sex?) The New York Times did a huge piece on Retooling the Fed for liftoff. The article had these charts. Click on them if they’re too big for your screen:
You can read the full New York Times piece here. It’s worth reading.
Ultra-depressing weekend reading.
+ How the Saudis (and us) are destroying Yemen and killing civilians. Yet another Middle Eastern country being destroyed. Click here.
+ The Next Genocide. Hitler believed he needed more room to feed his people. Drought has caused recent genocides in Africa. Drought was the original cause of the Syrian problems. Click here.
+ None of our Gulf State “friends,” including Saudi Arabia, Kuwait, and the United Arab Emirates are accepting refuges.
Today is the first day of Rosh Hashanah
It is the Hebrew New Year.
One old stockmarket adage was Sell on Rosh Hashanah, i.e. today. Buy back on Yom Kippur, which is in ten days.
From Wikipedia:
The New Year was the beginning of the cycle of sowing, growth, and harvest, the latter marked by its own set of major agricultural festivals.[1] The Semites in general set the beginning of the new year in autumn, while other ancient civilisations such as the Persians or Greeks chose spring for that purpose, in both cases the primary reason being agricultural – the time of sowing the seed and of bringing in the harvest.[1]
The day is said to be the anniversary of the creation of Adam and Eve, the first man and woman, and their first actions toward the realization of humanity’s role in God’s world. Rosh Hashanah customs include sounding the shofar (a hollowed-out ram’s horn) and eating symbolic foods such as apples dipped in honey to evoke a “sweet new year”.
Not from Wikipedia:
Rastas and Moses are outside the synagogue on Rosh Hashanah.
They hear a strange sound.
Rastas: “What’s that sound?”
Moses: “Why that’s the sound of the Jews blowing the shofar.”
Rastas: “Boy, them Jews really treat their hired help well.”
Harry Newton who ordered an iPhone 6s Plus on the weekend. My son Michael said I should get one. He loves his iPhone 6 Plus. He says because it’s BIG, it’s easier to type on. It has a better camera. And the new 6s has a faster processor. I covered my stupid Apple short the moment it went against me. Meantime, I have a few Apple longs. so I’m pleased that pre-orders on the new s line are strong. And I’m looking forward to receiving mine.
When money is above certain amount, allocation really doesn’t matter at all. Good health is everything. Harry, nice to hear from you everyday.
You and your friend have too much money invested in real estate. Real estate is traditionally one of the worst investments you can make, along with gold. It is not liquid and does not rise very fast.
That may very well be, however, the rents just keep right on pouring in every month.