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Current asset allocation?


valuecfa
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My current asset allocation:

 

8% Cash & Equivalents

10% Lower rated fixed income investments less than 1.5 effective duration

7% convertible preferreds

5% Fixed Income greater than 1.5 duration

60% Equities (largely US, with ~10% in call options, and ~10% in warrants)

10% Emerging Equities

0% direct commodities

0% in direct hedges/shorts

 

For some reason I'm reviewing my asset allocations today, as opposed to just the usual market price/instrinsic value of individual companies i own. Only contemplating shifts at the moment is allocating more to individual emerging equities, if i can find additional quality companies/valuations.

 

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I've got a 30% position that I'll be liquidating, so if there's nowhere to put it, it'll be in cash.

 

Gotcha. Out of curiosity, selling because it worked, or because it didn't?

 

Oh, it worked great.  I'd had a big position (I think almost 50% at one point) in CRUS (Apple supplier).  I've been selling it out as my positions turn long.  Next long lots are November and December.

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Oh, it worked great.  I'd had a big position (I think almost 50% at one point) in CRUS (Apple supplier).  I've been selling it out as my positions turn long.  Next long lots are November and December.

 

Maybe I'm just dense - sorry for asking you to explain stuff twice in a row - but what do you mean here "I've been selling it out as my positions turn long.  Next long lots are November and December."?

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I think he means long term, to pay cap gains tax rate.

 

That would make sense. Here in Canada we don't have that long-term/short-term capital gain stuff, so it's not something that comes to mind easily, even though I knew it applied in the US. Thanks for reminding me of it Sullivcd.

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52% equities

- 17% - Europe mutual fund (401k)

- 17% - AIG/BAC warrants

- 18% - other equities (more financials including the aforementioned)

23% personal loan (secured, good interest rate)

13% income-producing real estate

12% cash

 

I would love to get cash up towards 20%, but what to sell?  Just trimming off least-favorite equity exposure lately - even that is hard.

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I think he means long term, to pay cap gains tax rate.

 

That would make sense. Here in Canada we don't have that long-term/short-term capital gain stuff, so it's not something that comes to mind easily, even though I knew it applied in the US. Thanks for reminding me of it Sullivcd.

 

Is it just marginal rate in Canada?

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25% FFH

43% long equities

24% short equities

8% Gold

 

giofranchi

 

Giofranco,

 

Agree with you re FFH, BRK, L

 

How are you holding gold? Physical gold? ETF's?

 

FWIW, my capital allocation

40% cash (probably more than I like- I am a chicken-my plan is to continue to dollar cost average into ideas)

60% equity (UNH, ALS, FFH, BRK, BAC/AIG, LUK,  small amounts of SHLD,L, PEY, SU, RNK, BMO, HCG)

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25% FFH

43% long equities

24% short equities

8% Gold

 

giofranchi

 

Giofranco,

 

Agree with you re FFH, BRK, L

 

How are you holding gold? Physical gold? ETF's?

 

FWIW, my capital allocation

40% cash (probably more than I like- I am a chicken-my plan is to continue to dollar cost average into ideas)

60% equity (UNH, ALS, FFH, BRK, BAC/AIG, LUK,  small amounts of SHLD,L, PEY, SU, RNK, BMO, HCG)

 

biaggio,

 

actually, my portfolio is as follows:

25% FFH, pretty much unloved by the market right now!

43% long equities: owner-operated companies that are selling at or below book value (I also own LUK), the companies less loved by the market right now!

24% short equities: a bunch of small and medium cap, over-leveraged and cyclical stocks, the companies most loved by the market right now!

 

So… it is really a suffering!! :(

 

8% Gold: Xetra-Gold, because:

 

“Xetra-Gold is a no par value note denominated in gold issued by Deutsche Börse Commodities GmbH. Xetra-Gold is an exchange-traded security in the form of a bearer note that grants the investor the delivery of gold. Every single bearer note grants the investor the right to demand the delivery of one gram of gold from the issuer. The issuer holds a corresponding amount of physical gold and a limited amount of account gold with a precious metals company. The fact that Xetra-Gold takes the form of a security makes it fungible and as easy to transfer as a share.”

 

I look at Xetra-Gold as the easiest way to own physical gold. I might be wrong, but imho gold nowadays is the safest of currencies: I just prefer to own gold, instead of cash denominated in Euro. Some days ago an interview with Mr. Ray Dalio was posted, and someone commented: have you ever heard Mr. Dalio suggesting something “actionable”? Well, in fact it is very rare indeed… but at least his suggestion to own 10% of gold is definitely actionable! Isn’t it?

 

giofranchi

 

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Giofranchi: if you look in the prospectus of Xetra Gold, page 7 (link) you will read:

 

The obligations under the Notes constitute unsecured and unsubordinated obligations of the Issuer ranking pari passu with all other unsecured and unsubordinated obligations of the Issuer.

 

The proceeds fi'om the issue of the Notes will be used by the Issuer to acquire (a) physical Gold to be held in custody by the Depositary Agent and (b) Gold delivery claims, up to the Gold Delivery Claims Cap, against Umicore AG & Co. KG, Hanau (the "Debtor of the Gold Delivery Claims"), a subsidiary of Umicore s.a., Brussels, which operates several gold refineries worldwide and produces gold bars.

 

So you do not actually own physical gold, you just have an unsecured claim with an issuer who might have gold or might have claims to a gold refinery (we don't get to know anything about these claims). In other words: you are buying a bond, and you are paying monthly fees to own it.

 

It is ironic: the gold bugs want physical gold because the huge ETF's are supposedly unsecured and manipulated by the big banks. This led to scores of new issues catering to this niche market. Products like Sprott physical gold trust, issuing shares at a huge premium to net asset value. Or Xetra Gold, which is actually just a bond. These products lure retail investors by offering them the possibility to actually claim physical gold. Obviously at a cost and obviously nobody ever does this. Unless the world collapses and at that point the gold might not actually be there or other creditors have priority over you. It is just a nice marketing ploy. In their search for "extra-physical" gold the gold bugs end up buying shitty products that are specifically marketed to them. The big ETF's are actually the most safe (and the cheapest) way to own a stake in physical gold.

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