Total Asset Allocation


The last two Multi Currency updates looked at my liquid currency allocation and liquid asset allocation.

Liquid assets only account for 39% of my total portfolio.

Here is my total asset allocation.

Ecuador Property      15%
US Property              46%
Total Real Estate   61%
Equities                      3%
Emerging Bonds        9%
Bonds                      14%
Cash                         13%
Liquid                      39%

For the past two years our sites have been pointing out that there are four ways to beat inflation…  real estate, equities, your own business and commodities.

So why is 25% of my portfolio in bonds.

This is because bonds have been acting like equities and have actually risen more than equities in this last year… even though the Dow Jones Industrial Average just broke the 10,000 mark again.

Inflation has not yet kicked in and deflation has kept commodity prices and interest rates low… thus favoring bonds over equities.

Let’s keep a watch.  The global economy may be ready to rise again.

Jyske Bank says: On Thursday, the US jobless claims positively surprised by falling to the lowest level in 9 month. The good news supported the positive trend from the earnings reports and kept the almighty Dow Jones above the 10.000 mark throughout the day. Back in October 2008, the Dow broke down through the 10.000 mark, and now, for the first time in 1 year climbed above the magical mark again.

The 3rd Quarter reporting season is off to a good start. Last week Alcoa Inc. came out better than expected and injecting a boost of optimism in the market. This week Intel Corp., JPMorgan and Goldman Sachs continued the positive trend by all beating market expectations. Google Inc., IBM and General Electric came out in line.

However not all news was good.

Jyske also pointed out: Charles Schwab, Bank of America and Nokia underperformed. Nokia Oyj, the biggest mobile phone maker in the world, reported a loss per share of EUR 0.15 sending the stock on a free fall down more than 10% on the day.

On Tuesday, the German Investor confidence for October surprisingly declined, going against the consensus forecast of a small increase. The sudden spur of pessimism could be a result of the rising unemployment, the euro’s appreciation against the US Dollars and as some participants claims; a soon-ending to the supportive stimulus measures.
The largest economy is Europe has a jobless rate of 8.2%, and a GDP shrinking almost 6% year over year.


The long term advice to bet against the US dollar remains and Jyske fortified it in their latest reort which said:

The euro zone’s trade balance came out as a disappointment Friday. The data showed a larger-than-expected deficit in August as export dropped more sharply than imports. The euro has gained 15% versus the US Dollar the last 7 months, making it tough for European exporters.

Throughout the week the US Dollar has depreciated against the Euro, however as the currency pair bounced of its important technical resistance level of 1.4960 both yesterday and today the USD finished the week on a slightly firmer note at 1.4860. We in JGAM still expect the USD to break the technical resistance level opening up for a further weakness.

Gary


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