The 2010 Mix - More Thoughts

Though I'm generally pretty happy with the new portfolio for 2010, there are a couple of things I'm thinking about in regards to it.

• Do I have enough money allocated to cash?  Right now we are sitting at ~6.6%.  That seems a little low to me.  Even if Apple is sold (which I'm not hoping for), that will put me at about 11% cash position.  Is this enough to take advantage of opportunities that may arise?
• What is the correct manner to use stop with the portfolio?  Are trailing stops better than normal one?  What percentage should the stops be set at?  Should it be the same value for everything?  Am I prepared to lose 10%, or 15% through the use of stops.  I guess I would be if the market drops more than the stop.

Getting Ready for 2010

I know it's been a long time since my last post.  I've been spending a lot of thinking about both my lack of investing direction and the direction of the global economy (and markets) for the next year.

One big problem that I have, is that I read too much.  I subscribe to a number of financial/economic/investing blogs and while I can't read every post that shows up in Google Reader, I tend to think I can get a general feel.  The one thing that has become apparent to me is that nobody really knows what is going to happen!  The other big problems that I seem to find myself having is my general pessimism and my fear of another of a another big tumble.

So where does that leave me? Well, I've sat down and tried to think about more general ideas about where things are going and tried to shake find constructive ways to deal with the fear and pessimism.

Here are my few general ideas I've come up with:

1. Interest rates in the US are at all time lows.  In fact the Fed rate is effectively at zero!  So I think that interest rates will eventually go up.  That means that bond yields will likely also go up and bond prices down.
2. The low interest rates seem to be indicative of the US government trying to inflate their way out of their current problems.  Basically, if you are a huge debtor, inflation is good for you because it make your debt essentially smaller.  So inflation will soon be an issue.  This means that "stuff" like metals (precious and otherwise), oil, agricultural product, ect. will be more expensive and the people (ie countries) that produce them this "stuff" will be more profitable.
3. Oil and gas are in this "stuff" class, and as they get more expensive, alternative energy will become an important and necessary area.
4. There are a number of up and coming countries around the world who are very open to new business and so far seem well governed.  These tend to have large populations that will soon what all thing we take for granted like cars, cell phones, resturants, clean water, ect.

Most investing will be based on one or more of these 4 central themes.

As I mentioned above, I am horribly afraid of another deep loss.  To help take some of the emotion out when I should sell, I plan to use Stops and Trailing Stops to help set some trigger on when to sell.

So, on to the investments:

Ticker	Description	Allocation	Theme(s)	Notes
BKF	BRIC ETF	7%	#4	General Exposure to Brazil, Russia, India and China
EWA	Australia ETF	4%	#2	Australia seems to be well governed and they are a big producer of "stuff"
EWC	Canada ETF	4%	#2	Again, well-governed (for the most part) and a big "stuff" producer
EWW	Mexico ETF	4%	#2 and #4	A "stuff" producer, that finally seems to have figured out they need to deal with gangs
GDX	Gold Miner ETF	2%	#2	Exposure to gold miners
HGI	International Asset Income ETF	5%	no theme(s)	Looking to get more international exposure as well as something to generate some dividend income.
IDX	Indonesia ETF	4%	#2 and #4(s)	Indonesia has a huge population in a fairly stable country(some terrorism issues), they can also be considered a stuff producer.
SLV	Silver ETF	2%	#2	Silver is "stuff" and good hedge against inflation.
GLD	Gold ETF	2%	#2	Gold is "stuff" and good hedge against inflation.
TBT	Short Treasury Bond ETF	7%	#1	Will go up as yields rise, ie is inverse to bond prices
TUR	Turkey ETF	4%	#1 and #2	Similar to Indonesia
VIPSX	Inflation Protect Treasuries	5%	#1 and #2	Treasuries indexed to inflation
VTI	Total US Markets	7%	no theme	straight up bet in US markets, I used it to give a bit more US exposure to a portoflio short of it.
XLU	Utilities ETF	7%	no theme	Stable dividend payers
XME	Metals and Mining ETF	2%	#2	Stable dividend payers
IXN	Global Technology ETF	5%	#4	I think technology is a good play
PSP	Private Equity ETF	5%	no theme	Interesting play,a little risky
PCY	Emerging Market Bond ETF	6%	#4	Should be a fairly stable, with nice growth prospects and a good yield.
PUW	Progessive Energy ETF	2%	#3	Concentrates on companies using fossil fuel more efficiently
PBD	Clean Energy ETF	2%	#3	Concentrates on companies using green renewable energy sources
PIO	Global Water ETF	3%	#3	Concentrates on companies water treatment and efficient water consumption
AAPL	Apple	4.37%	no theme	Only stock left ofver
Cash	Cash	6.63	no theme	It's cash!