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

To: John Vosilla who wrote (73087)	10/28/2006 9:03:27 AM
From: SouthFloridaGuy	Respond to of 110194

1) There are always certain parts of the economy doing well and others which don't, this is nothing new. 2) Long-term cash has ALWAYS been trash, but isn't always in the medium term. Asset Allocation is an iterative process. For instance, yesterday I was thinking about purchasing South African Rand and Iceland Krona. But I quickly asked myself, is it worth it? Is it worth speculating in other currencies when your home currency is paying close to a sufficient amout of real interest (in this case, as per the TIPS yield, 2.55%). The answer in my mind is, after transaction costs and risk, it probably isn't worth to put a large amount into that type of trade as the risk/reward is nowhere near what it was in 2002 (although I would buy Brazilian Real in a heartbeat if I knew how to). That's why one needs to invest in the overlooked asset class and sell the speculative one and never look back. Gold represents a good example of what I believe to be an overlooked asset class (up 100% in 6 years, big deal). But it's not because I am trying to hedge against US Dollar devaluation, rather, it's the profligacy of OTHER central banks like the JGB and ECB and to smaller extent the Fed which lead me to conclude there is way more upside in the yellow metal. In my mind, the housing bubble has definitely created a multitude of opportunities in other asset classes.