to do
dividends
balance – bear funds – how much, which one(s), likely outcome
hedging – long/short ETFs – cancel out?

2006.12.8
Beating the Dow with Bonds sounded like an ok strategy. However, currently the forumla says be long Small Dogs of the Dow. All are up significantly but well down from their peaks. So although it has been better, get while the getting is good.

Starting in July 2006, this turned out to be very profitable, even though GM is bankrupt. It is hard to imagine that Verizon is going to do well if a credit crunch comes and all those midlle school kids have to turn in their cell phones. GE is a financial company and goodness knows what kind of wacky derivitives they have going. Pfizer has its own problems as the follow-on to Lipitor goes off course. AT&T – if you have to move in with the parents or the kids, you don\’t need to make a lot of long distance calls.

So I virtually sold off the whole lot. Nice profit – too bad it was only a paper exercise.

2006.11.2
I included Devon Energy because it was listed in the US but had major holding and operations in Canada. So I was pleased to see that it is doing quite nicely, thank you.

Devon Energy (DVN) indicated that the company will slow investment in its conventional gas business in Canada in response to persistent cost inflation. The concept of deferring investment amid deteriorating conditions is not unique to DVN. What is unique to DVN though is the DVN\’s deep inventory of investment opportunities in higher margin (heavy oil, Barnett) and growth (Lower Tertiary) areas. This should allow the company to effectively reallocate capital.
http://energy.seekingalpha.com/article/19756

2006.10.24
Looking to replace international funds and add to international and dividends using ETFs

PowerShares International Dividend Achievers ETF (PID)
PID seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Mergent International Dividend Achievers Index.

2006.10.24
Prudent Bear (BEARX) is just a managed fund with more consumer goods and services stocks than seems prudent.

2006.10.12

• Bonds 30%
  safe with some income, TIPS in case of inflation, Treasuries – various durations 4.6% isn\’t bad if interest rates go down again as many pundits are forecasting, some shorter in case interest rates go up and there is an opportunity to get an even better rate (doubtful)
  Get out – change type, but not overall percent
  Buy more – safe haven to protect principal if things get nasty
• Dogs 10%
  O\’Higgins / Soros – so long as it is making money, why not. Consider short-term only
  Get out – O\’Higgins rules say to and/or down 5% and/or below 200day
  Buy more – don\’t think so – after very big correction, might revisit O\’Higgins and buy the then-current Dog stocks
• Energy 10%
  some income, important investments long term but may be better to get out and come back later as correction may depress good energy stocks too
  Get out – stop loss around 7-10%, depends on income
  Buy more – wait and see – correction, stablization, world events, price of oil, better reserves information
• Hedge 10%
  Dow – theory is the Dogs will do better than the Dow as a whole so long the Dogs and short the Dow
  Prudent Bear
  Rydex Inverse S&P – against \”inevidable decline in the S&P
  NASDAQ short – betting on a significant correction
  Get out – after a significant correction
  Buy more – as correction seems more likely, some sectors may be more effected so may want to add more hedging in specific sectors – financials, real estate
• Income 20%
  dividends, income trusts
  Get out – find better returns elsewhere
  Buy more – real return better than expected
• International 5%
  diversification, other economies may be better investments
  Get out – general pullback everywhere
  Buy more – more promising than US
• Metal & commodities 10%
  basics will be important, especially with a major downturn in the US economy and the rise of others like China, better long-term investments than financials, real estate
  Get out – 5-7% decline if looks like will be taken down with the rest of the market and plan to buy back lower
  Buy more – after correction
• Xplore 5%
  watch for bargins, opportunities, market mis-pricing, general short-term or move to one of other asset classes as appropriate
  could be important in the future – life science, 3M
  ETFs still going up for now – how long??? – ready to bail at anytime – S&P, NASDAQ
  Get out – small investment so stop loss 5-10% or whatever seems reasonable
  Buy more – looks like good longer-term investment

2006.10.9
I\’m reading Inside the House of Money. It is a series of interviews with hedge fund manages and other financial managers. Some of the ideas that seem reasonable warrent investigation, so here goes…

Energy stocks – They aren\’t making any more so someday oil and gas will be more expensive – likely in 5-10 years. Between now and then? It depends. Prices for energy stocks are already pretty high. If there is a significant down-turn in the economy, there will likely be a decline in the price of these stock because the price of everything will be adjusted downward AND energy consumption will decline as consumers reduce their car travel, and reduce purchases of products and services resulting in declining demand for energy. So buy energy stocks now or wait until prices decline before an eventual increase?

Bond ETFs – In real life, I would probably acquire Treasuries and TIPS but for the paper portfolio I \”bought\” ETFs instead as a way to include them in a trackable form. I\’m using Yahoo! finance to record the holdings and transactions.

Foreign currency – Canadian, Australian, The US$ is expected to weaken. Foreign central banks have been the primary purchases of US Treasuries. Will they do this indefinitely?

2006.8.24
At the end of July 2006, I set up a paper portfolio. What would I do if I actually had to manage the family investments. My SO does a great job, so I\’m not looking to take over any time soon, just be ready and confident if God forbid, the need arises. I should know enough to step in and take over.

So I went through the whole thing – review current situation, research asset allocation strategies that match our ages and risk tolerance, and came up with an outline and a plan.