Portfolio update

Since the beginning of the year, my portfolio has mostly be betting on a further fall of the USD (long FXE, FXY, FXF, IAU i.e. short dollar), demise of the U.S. banking system (long SKF i.e. short banks), fall of speculative markets (FXP i.e. short Chinese markets) and resistance of a few companies like AAPL or GOOG with a following of highly-satisfied proselytist buyers/users at 30%/40% of their 52-week high. Apart from these two stocks, which I have acquired recently at respectively ~$135 and ~$431, this has just been a continuation of my 2007 bearish stance on the U.S. dollar and U.S. financial system.

I’m still a long-term bear on the U.S. dollar and U.S. financial system, but I believe that this may change in the very short-term. Now that the Dollar has fallen to a 12-year low versus the Yen, and record low against the Euro, oil is at $110 and gold at $1000 (from $650 in early 2007!), I think the danger of a downward spiral is becoming clearer by the day, and many of our “leaders” are freaking out, especially when cracks are starting to appear some high-flying names like Bear Stearns. As a result, I’m expecting in the next few weeks a massive coordinated action from central banks, with the objective to support the dollar (read “desperate attempt”). I don’t think this will have much more long-term success than the last attempt by the Fed, which propped up for a day the DJI by more than 400 points and which I used to buy more of the above, but in the short-term, it may have a dramatic effect on whoever is a U.S. dollar and U.S. financial bear.

If I look at the recent attempts, which were mostly based on a “news effect”, this attempt may actually be carefully coordinated over time, in a way that maximizes desperation of dollar bear speculators and changes the pyschology of the market (there is a lot of irrationality in currency markets). Anyway, I’ve decided that I’m not willing to bear the risk of a short-term spike in the dollar value and have cancelled fully my dollar bearish positions today and I’m adopting a wait-and-see, roughly 80% USD cash 20% stock strategy (expecting good surprises from AAPL and GOOG).

Let’s see what happens.

Disclaimer: This is not an investment advice.

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