Tuesday, January 5, 2010

So Cold I Might As Well Write

The nipples on my man-boobs are hard, but you can't tell as I'm wearing three layers of clothes and have a fire in the fireplace. As a "snowbird", I'm in Florida for six months and it shouldn't be this cold. I know I won't receive any consolation back home in Nebraska, so I might as well gripe to readers. The weather sucks so lets talk investments.

I'm having trouble concentrating on my typing as I'm powerfully drawn to the set of real tatas to my left. Unfortunately, of late, you won't see any of those either in Florida as they too are clothed in three or four layers. What does this have to do with investing money? Not a thing.

Everyone that is in the stock market has ben enjoying themselves. retirees and those that are sitting out the rally are miserable and going broke. Those straddling the fence need to be nimble as the game of musical chairs is in full swing. How long will the music continue to play? Warren Buffett once said that you can go broke waiting to be right and he's not only the guru, he's correct. This party could go on for quite awhile with the Fed's cheap money and support. But the rest of the world's central banks aren't as accomodative.

The wheels are starting to fall off in Europe and a German led bailout doesn't seem imminent, so the weak sisters will have to pay higher interest rates to roll over their debt. That thought process will be catchy and investors will look askance at other countries that are spiralling out of control besides Greece, Ireland, Iceland, Italy, and Dubai. U.S. rates are going up and they will continue to march upward much to Obama's chagrin and the retirees glee. At some point in the process the stock market starts to look not as attractive as we still have all of our economic problems and, finally, an alternative investment. Remain nimble with equity investments as problems lie ahead. I just don't know when the tipping point will occur. One thing I do know is that it is easier to concentrate with the nipple image at the top of the page and out of sight!

My portolio is about 50% invested in equities at present. I wish it was fully invested, but I like sleeping at night and as an oldster, I don't have the ability to rebound over a long period of years. I continue to write covered calls and gather dividends during the march of the music. Those types of stocks will decrease less and at a slower pace than the market in general, but even conservative stocks will go down when the market swoons.

Watch bond yields and lighten up as they rise. Ten year yields have been on a march and should continue to increase, but concentrate on the shorter maturities. As they move, exit or lessen your equity positions unless you have long time horizons and no need for cash.

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