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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (15757)	6/23/2004 2:57:48 PM
From: glenn_a	Respond to of 110194

Hi orkrious. Re: hedging on the "hard asset" side ... Firstly, I consider myself more of a long-term value-oriented investor. So sort of a rare species these days. FY 2003 was quite kind to my investment portfolio, so for FY2004/2005, my goals are defensive in nature - i.e. to lose as little money as possible. I don't buy futures or options. My particular area of interest is technology, and in particular disruptive technologies and business models. But as a value investor, it's pretty lean pickings these days. I want to feel comfortable enough with my portfolio that I can ignore my holdings for a two-three month period, and not worry about it in the slightest. Thus, I orient it towards a year or two in the future, while trying to tailor it as much as possible to present conditions. I take into account macro considerations, particularly credit and monetary conditions, valuations, and business models/strategy when investing. That said, here's how I'm positioning my portfolio: 1 - 50% cash & cash equivalents - mostly CDN$ denominated T-bills. Rationale - safety of principal, deflationary hedge. In a time where liquidity is undervalued in the marketplace, and this situation has continued for some time, I am emphasizing liquidity and safety in my portfolio. 2 - 8% physical bullion; 15% junior precious metals (with a smattering of base metals). Junior equities is an offensive position. I subscribe to Claude Cormier's Ormetal report - and my two largest PM holdings are CKG and CLG. I've also taken positions in Russ's suggestions from time to time. Rationale: Hedge against extreme conditions - inflation or deflation. Physical bullion is to me a near cash equivalent. Also protection against long-term decline in US$, and if we are entering a secular commodity bull, and by some miracle manage to avoid a deflationary collapse of the global economy, precious metals and PM equities should perform well. 3 - 17% junior energy companies. Again, a more aggressive play, though both my holdings here represent good value IMO. Own Real Resources (RER.TO) and Tusk Energy (TKE.TO). Both long-term holdings. Rationale: Inflationary hedge. "Peak Oil" play. Hedge against fall in US$. Play on secular commodity bull. 4 - Technology. 11% of portfolio in Wi-LAN of Calgary. A very pure play on WiMAX. Wi-LAN has core IP at the PHY and MAC layers of the WiMAX solution - i.e. IEEE 802.16 standard. It has long been Wi-LAN's claim that its IP applies to all OFDM-based broadband wireless solutions (not just 802.16/WiMAX)- in particular, 802.11a/g solutions. Interestingly, just today Wi-LAN announced legal action against Cisco for infringement on its OFDM-based patents: biz.yahoo.com Rationale: In an otherwise defensive investment portfolio, Wi-LAN is a very aggressive holding. Large potential upside. Reasonable downside protection (but only reasonable; its share price would surely suffer in a broad-based liquidity crunch). Great cost structure. Industry-leading margins. Superb technology. Strategically and operationally top-notch. Leveraged to broadband wireless growth in emerging markets - most specifically China and India. Positioned in an industry at the early stages of very significant S-curve growth (IMO). I look forward to the day when great technology companies trade at discounts to their business value. But that day sure ain't today. :) In a nutshell ... that's my strategy. Anyone else care to share their present strategies? Regards, Glenn