Hi CD, welcome to the madness :0)
<<… stretched too thin?>>
No, not really, because I am an asset ‘allocator’ at the core, and a momo rabble-rouser at the edge. I want to feel participative, but do not wish to be destroyed by any one participation:
(a) The mathematical average size of my position in 56 stocks is 0.32% of gross asset, which also is about my normally ‘allowed’ concentration in any one stock.
The largest position, Lumacom, is 3.58% of gross asset, had capital-gained from an original position of less than 0.6% of gross asset; that was extremely daring of me, given the ‘double-average weight allocation’ on such an unknown.
The smallest position, IRSA of Argentina, is at 0.02% of gross asset, being a residual convertible bond position left over from the sale of the stock from which the convertible bond resulted from.
For context, my entire US/Canadian energy royalty position is 3.73%, and my NEM position is 2.61% of gross asset.
(b) My largest single class of liquid assets is cash and near-cash, and of that, now mostly Canadian cash @ 18.6%, followed by physical/paper gold @ 14.6%, and then HKD @ 10.7% due to very recent exit from AUD to HKD.
I need to dispose of the HKD as soon as I can figure out destination, because I do not feel comfortable with HKD vs USD, nor do I gain much comfort from USD.
Over the weekend, I have a decision to make, (a) increase CAD allocation (but I am concerned about SARS), (b) increase gold allocation (because I am concerned about USD), or (c) decrease gold allocation (because I am concerned that gold can retreat back to 350), (d) increase USD (perhaps I want to capture/lock-in all gains given my USD base account denomination).
(c) I liked non-USD currencies over the past 24 months and they have been the biggest contributor to my gains, because they were 'safe' cash, and were relatively slow moving, allowing time for gradual entry, without equity valuation risk, and they had moved mostly one way, in the predictable direction (GoldUpDollarDown).
Now, while I still believe GUDD is the way, I want to take advantage of temporary wobbles in gold/USD to capture some gains. I have not been very good at this in the past, panicking back into gold and out of USD at turns, get whiplash, and generally not having much of a good time. I attribute the panic to my realization that we are in a secular Dollar bear market.
(d) I will likely be increasing my allocation to Alkane Exploration, Aztec Resources, Metal Storm, Millepede Intl, and Record Investments to the 0.32% of gross assets level, approximately tripling my current and initial allocations. Should any one do a ‘ten-bagger’, good, and should any one of them disappear on me, not so much harm. I am not in these no-recognition stocks because I believe they will return 20% per annum on buy-in price.
(e) Of the 56 stocks I hold, once they were chosen, I do not feel I need to do too much continuing DD or keep such a close eye on them, other than reading the news flow, watch the macro scene, in some cases count the dividends, and occasionally make some adjustment. No single position can be fatal.
I occasionally go over-weight on one position, only to quickly trade out, leaving the original ‘core’ in place.
On Lumacom, I am happy with the over-weight, because of my cost basis, and because I believe in the company’s direction. I do have an interim target at which I will sell, and when I do, I will, as always, post in real time.
On NEM, I am happy with the over-weight, and may go further over-weight, because I believe that GUDD will be true for longer than most folks can imagine. Thus my concern with my temporarily high HKD cash position.
On energy royalties (3.73% of gross asset), my largest allocation is Vermillion uk.finance.yahoo.com at 0.93% of gross asset, and smallest one is Prudhoe Bay uk.finance.yahoo.com at 0.23%. I will be adding to the sector on pull-back, but am happy with the ride up in the meantime.
(f) Now you can see why I was muttering about concern for 2004. I do not have any comfortable feeling about what constitutes the NToeAwsBe Message 19247698 <<August 26th, 2003>> of 2004, as in what is the obvious macro play? Trying to make material gains via increasing % allocation to individual stocks is much harder work than what I had to do in the past few years.
In another figuring, of my YTD NAV gain of 11.52%, close to 300 basis points resulted from a nano-cap stock traded in the Great Outback's equity backwater market of Sydney! 600+ basis points from currency and physical/paper gold plays, and the rest from other stock gains and option premium collection.
Chugs, Jay |
