Oh girl that feeling of safety you prize
Well it comes with a hard hard price
You can't shut off the risk and the pain
Without losin' the love that remains
We're all riders on this train
Well it comes with a hard hard price
You can't shut off the risk and the pain
Without losin' the love that remains
We're all riders on this train
"Human Touch" By Bruce Springsteen
The two main risks in the investment world are: 1) The risk of losing money, and 2) The risk of missing opportunity. As investors we constantly struggle with these opposing risks. You can completely avoid one or the other, or you can compromise between the two, but you can't eliminate both. One of the reasons investing is so challenging (in a good way) is the balancing act between these two risks. When do you emphasize one risk over the other, and by how much? During bull markets the risk of loss rises, but the lure of missing opportunity is very seductive. During bear markets the risk of loss is low, but the pain of losing more is powerful. With all of our sophisticated computers and models, it still requires a "human touch".
At Rockhaven, our philosophy is to be "in harmony with the markets". Through broad asset diversification we seek to be exposed to what is working, and under exposed to what isn't. The last two weeks have seen a massive increase in volatility and we have seen a decided shift in the markets risk preferences. There has been a dramatic shift out of european equities and fixed income, and a flight to "perceived" lower risk US fixed income and gold.
Where do we stand?
US Equities -- Bullish, but rolling over
Int'l Equities -- Neutral for EAFE and Bullish for emerging markets, but weakening
US REITs -- Bullish
Int'l REITs -- Bearish
Gold -- Bullish
Commodities -- Neutral
US Fixed Income -- Bullish
Int'l Fixed Income -- Bearish, except for emerging markets
Cash -- Increases to 13%
Bloomberg TV Interview with Nassim Taleb:
I am a big fan of Nassim Taleb author of Black Swan and Fooled By Randomness. Nassim is not your conventional investment professional, he calls them like he sees them regardless of who gets hurt.
In this interview on Bloomberg TV, he cuts no corners. He dislikes Geithner, Summers, anyone in the OMB, and Bernanke. He thinks the euro bailout is a disaster. He thinks the structural problems in the EU and the US haven’t changed since the crash. You don't cure a debt problem with more debt! He thinks schools teach all the wrong stuff about economics and investing. His biggest worry, as is mine, is a failed treasury auction. He thinks that long-term Treasurys should be avoided. He is worried about hyperinflation.
One of the funny things he mentions in the interview is that Geithner’s house is very near his and that he is way under water, and we shouldn’t have guys like that running our treasury. I've also posted a “Daily Show” skit on Geithner’s house.
There’s some really good stuff here.
Geithner's House -- Home Crisis Investigation
OK so our Treasury Secretary bought the house at the top of the market on 8/16/2004 for $1,601,700. He initially listed it for $1,635,000 and lowered the price to $1,575,000 on 5/22/2009, Zillow puts the current value at $1,273,500. So Geithner is down about 20%, if he can sell it. It appears that the house is currently off the market, and is being rented. The funny part is that he bought the house from Goldman Sachs Vice President Michael Millette, and the day he bought it he took out an additional $250,000 home equity line of credit (hopefully not to buy that bathroom tile)!
I love the internet. If you want to check it out yourself on Zillow the address is 32 Maple Hill Dr., Larchmont, NY 10538-1614.
Attack of the 50ft Pelosi:
This is one of the funniest political ads I can remember, enjoy!
Attack of the 50ft Pelosi -- Share This!
Be careful out there,
Chris Wiles
This article contains the current opinions of the author but not necessarily those of the Rockhaven Capital Management. The author’s opinions are subject to change without notice. This article is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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