how's your portfolio doing?

Discussion in 'Risk Management' started by lrf3, Oct 24, 2008.

  1. lrf3


    I was just curious about how other people are doing in this market. Stories they've heard and what not. Also curious to know if I'm doing better/worse than the "average" individual in terms of performance.

    My situation -

    I bought into the hyperinflation scenario around the start of this year. I managed to put 20% of my portfolio into gold, silver, canroy, energy, coal, nuclear, agricultural, russia(majority in ETF's). I kept 80% in cash because I figured the commodities would be volatile - boy was I right. I've always been debating about inflation vs deflation and worried about its timing and sequence (peter schiff, puplava, jim rogers vs robert prechter).

    Now I'm down 10% on the whole portfolio and now I figure the worst case scenario is down 20% on the whole portfolio. I'm worried that I'm too late to hedge now. Not used to these swings as my wife inherited quite a bit of money recently. Looks like I'm going 20% down assuming commodities and producers go to 0(which I think would be impossible- maybe 95% down). I'm not willing to sell now. I'm an emotional wreck but my wife is OK with it and has been supportive. Maybe she should deal with the finances. I figure we would have been much worse off with a Financial Advisor(90% equity allocation for a 30 year old). Short term trading with stops would have been a much better approach.

    Question now is when to buy back in with the other 80% in preparation for the "hyperinflationary holocaust" as Jim Rogers calls it. Other rhetorical question - should I become a farmer(as Rogers has suggested) or keep on studying for the CFA exam this December for that nonexistent finance job.
  2. If you're 80% in cash there's little you should be worried about right now (except for your broker or bank going bust!). Just let things play out.
  3. Daal


    there is your lesson to do your own homework. rogers and other inflationists are too biased to be relied on
  4. If you are freaking out about losing 10% during a year when the S&P fell almost 50%, then you really are not cut out for investing IMO. Even if you buy the exact low and go 100% long stocks at S&P 400, you will always be selling out the whole portfolio every time the market dips 10%. You can't be long stocks if your risk tolerance is for 5% drawdowns.

    You would be best off putting your cash into t-bills or short-term government bonds (e.g. 1-5 year bonds).

    As for what to do with the other 80%, you are joking if you think you are going to time the resurgence of the inflation trade - assuming it resurges. With this volatility, your proposed 100% allocation, and your miniscule risk-tolerance, you will freak out and sell at the first retracement or dip.

    It sounds like you'd be better off trading limited risk bets with stops. Risk 0.5% per trade or something.
  5. Or you could do the rational thing here and just buy stocks on dips slowly, not all these stupid commodity bubble stocks either..good real companies..not liars standing next to empty holes in the ground.

    Really though, I agree if you can't take a 10% loss and are thinking of becoming a farmer I'm not sure what you are wasting your time with a CFA for..
  6. -54.93% YTD

  7. + 32% :)
  8. I tend to watch what other speculators are performing to some degree - but don't pay too much attention to it or think too much into it, it doesn't really matter because there are good and bad traders all over the spectrum....and various people have lost money. I'm a position trader by the way.

    Hedge funds (not managed futures funds) in Canada are ranging from -67% to +19.41% YTD... as you see it's all accross the board. Funds heavily into oil & mining took the largest losses...due to over-leverage (like me) and simply over-greed, and basically the floor pulled out from under you.

    It was very difficult to hedge the oil collapse simply due to the velocity of the sell off....It is also not abnormal to have companies down -80% from the HI.

    These swings are very normal if you are playing in the commodity game, so it doesn't bother me much. Try and not think too much about's just money. If it really does impact your stomach or you think about it at night - move to something else like intra-day trading. Position trading certainly isn't for the faint of heart.

    Short-term trading with stops is not the holy grail in my opinion, and wouldn't necessarily save you. In order to make the big gains in the overnight game, you need to accept the reality that the potential losses will be just as big.

    You can PM me if you want to know more about what I was doing to produce stellar losses like these or have any other questions.
  9. Or your money becoming worthless.

    Smart money that actually has cash is buying assets at a discount. At the same time, many "hot shots" find themselves in liquidity problems and start either liquidating for cash flow or going into cash thinking it's a safe haven.