Hello Maurice, I wrote this message to you while on the balcony, picking at a breakfast of scrambled eggs and country sausages.
I think about 2003.
What do we know?
We know the economies are linked, but not necessarily in sync. It is possible for one country to deflate, another to inflate, and a third to be apparently price-stable (helped by having its medicine inflate at 25% per annum, and TV deflating at 5% per year).
The pools of funding are connected, but not at equal temperature, toxicity or height/pressure level. It is possible for one country to deflate, another to ...; but because the pools of funding are connected, they will seek a common level, of toxicity and interest rate, even as the height/pressure and exchange rate ebb and flow in accordance with natural laws.
These self-evident and fundamental truths, aggregated from an avalanche of facts point to an obvious but banal working thesis, that 'there are always opportunities somewhere, at all times'.
Easy to say, difficult to explore, exploit, and not financially die.
I am almost sure I do not need to remind you, but just in case, I will: investment success is more about asset allocation, timing of allocation, method of allocation entry, risk management, and dumb luck, than about picking the right shares for a 20 year LTBH ride through rapidly evolving finance-scape and technology universe.
Let us get back to opportunities. We had our bit of fun with high cash allocation, and we have out-performed Abby Jo Co's now vaporized virtual portfolio, and ACF Flyer’s 3D portfolio by an outrageous margin. We must, in the spirit of Columbus and other ancestors, explore new worlds.
You are right about the problems with cash: it earns nothing, is printed, has no intrinsic value, and is but a score-keeping unit.
Our goal is to be happy. While a higher score is not equivalent to a higher state of happiness, there is a positive correlation between the two states.
Our objective is not to maintain our score, but to increase our score. For that, we must venture forth and rip the scores from others, and in turn, keep these newly accumulated scores for ourselves.
I have now increased my score by borrowing from the Japanese, even as I speculate against the USD holders, while paying tribute to Aztec traditions, and taking a chance on the bobs of equity and counting on the interest of bonds.
What do we do for 2003 ?
Do we play Pezz's game of punting the small caps, or is that an idea past its use-by date?
Perhaps we continue to hide ourselves in cash, waiting to be blown up to bits by Greensputin?
Maybe we venture forth in emerging markets, and experience the carnage closeup?
Or do we join ACF Mike in death match on the NYSE?
Actually, truth be told, what I prefer is to participate in the next mania that creates a bubble, suitably risk managed;0)
Chugs, Jay |
