Hi folks, my first post and I need help structuring my portfolio for long term security. I am completely confused about what is safe and if we face inflation or deflation when I read the financial press. I have several million I want to park long term with security as the top priority. I am told treasuries may default, property may deflate, gold may be confiscated, banks may fail etc. Any way round this horrible mess? Many thanks for any help. My reason for posting here is I am learning to trade basically because I am thinking that perhaps there is no long term security and mobility of cash is the best option. However that in itself brings risks outside of trading performance like if the broker fails or the exchange is attacked by terrorists. I am totally confused about how to build a safe long term strategy but thankfully my swing trading is coming on well.
Several million? You're like a slum dog millionaire posting here on ET. Why don't you try diversification? Put some in fixed income and some in dividend aristocrats, you know, the stocks of companies that raised their divvy every year for the past 35 years. Either that or go for ETFs or both individual stocks and ETFs. For the fixed income portion, you can try PFF, which is an ETF that follows a basket of preferred stocks.
Allocate a small portion of your capital every year to DOTM puts against the SPX ( 5%<). The rest, split unevenly between high-yield, low-debt blue chips and commodities (agriculture and metals). 30:70. This keeps the portfolio near-even in a deflationary crash. Which, in real terms, means you finish ahead. Big time. When QE2 and inflation kick-in (which it will, eventually) metals and commodities take-off and you'll gain. The key here is market forecast is range-bound with a deflationary-bias (down) until Bernacke throws in the towel and monetizes. That could take a few years. In the meantime, we could revisit the '09 lows. This is where your put protection keeps you green, or at least, treading water. When Ben makes one last horrah, metals and agriculture go parabolic. Buy metals and commodities after the next wicked sell-off. Buy put protection at or near market highs. Sell them when bailout cash is allocated *and spent* = good bottom signal. This keeps your cost basis down to maximize upside returns.
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I have several million I want to park long term with security as the top priority. ------------------------ Visit the Pope. Tell 'em Nutmeg sent ya.
This is the best post ever for this wonderful message board. Asking for advice on the internet? Why don't you simply take your million and burn it? Then you can have a simple life and not worry about all these important things.