Bigworld, Yes, definitely a tough market, and for all asset classes. Luckily a few weeks back I exited the various tech sector ETFs (cloud computing, cybersecurity, etc). Those were phenomenal last year, and are still great areas, but the valuations just got too crazy. With the economy set to recover, everyone has been flocking into the cyclicals.
Personally, I never liked the cyclicals much since you can't just buy/hold like you can with growth stocks. Instead you have to time them based on the economic cycle, so too many timing decisions that can go wrong. Plus cyclicals tend to be in the fading 'old economy' instead of the new high growth areas. So I decided to just stick with broad market ETFs, and you get the growth side and value/cyclicals all in one investment, covering all bases.
The big allocation tool that has been missing is bonds, but with rates rising it's just too risky to be in bonds. That leaves cash, but then there's no income. Then there are stocks, which are overpriced and volatile. 35% seems to be my current comfort zone for stocks, though I bumped it up to 39% to take advantage of recent bargain prices. But 40% is the current boundary limit..
It would be nice if gold could be the unquestioned 'go to' destination, but there are just too many question marks imo. The rationale for gold is that they will eventually have to go back to a gold backed money system as part of the coming monetary reset. But unlike Bretton Woods (gold backing), the solution this time will be the SDR. Rickards says no central banker on Earth wants gold backing, though they may have to resort to it to restore confidence in the system. But they won't include gold backing if they don't absolutely have to. They are clearly working toward an all digital cashless system, so where is the role for gold? Just too many unanswered questions, so for now Rickard's 10% gold allocation seems to make the most sense. I figure once gold bottoms and starts to turn back up there should be trading opportunities with the ETFs and miners. But for buy/hold, 10% in gold does make sense as disaster insurance.
AI
