James recommended 100% cash in an article in seekingAlpha.
I analyze 2012 a little differently from James. I expect not much change from now to mid 2012 - we'll have the same volatile market. In mid 2012, we've to evaluate the market conditions again. If the problem like EU crisis is resolved, I would move all cash to equities and expect a 10% return for 2012.
It is not practical to predict for the entire year and we have to change our strategy when market changes. Other than that, I am pretty much with James.
Update. Even with the market up, James did not change his position and predicted sth bad could happen in April, 2012. Pretty agree with him that EU have to do sth drastic.
Click here for my crystal ball for 2012.
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My profit calculator = (my rate of return - SPY return)/abs(SPY return)
Or, how well I did against S&P500 at year end.
If S&P loses 5% and my return is 0%, then I'm 100% better than S&P 500 even I gained $0.
You do not have to make money every year and you do not want to violate Buffett's first 2 rules of investment: Do not lose money and do not forget rule #1.
If you're good market timer, you can gamble with shorts and contraETFs. Personally I do everything with emphasize on safety at least for the next 3 months.
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(c) TonyP4 2012. Written in 12/23/11. Last updated in 12/23/11.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
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Tony,
ReplyDeleteThanks for the nice blog, I always enjoy it. You are pretty pessimistic about 2012, are you saying we should stick to cash in the first half? I was thinking about to take some positions next year.
Cheers,
Si
I'm an opportunist and will change position when the market direction changes. Hence, every one has to decide for him/herself. Currently my cash position is moved from 30% to 35% and sell several covered calls with variable results.
DeleteOnce EU solves the problem (April predicted by James), I could be all in as the biggest profit return is from turnover.
I predict a 10% return for S&P for 2012 which is better than my 6% for 2011. Hence I'm more optimistic than last year.
ReplyDeleteBy today, James is not correct in his prediction. I still like most of his analysis. This is another example that Ms. Market is hard to predict. However, in the long run, those with good analysis are right more than wrong. I do have about 50% cash now and wait for the correction to move back. You can't be broke for taking profit. We should not regret for our predication if it is based on educated guesses.
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