So where do we invest our money?

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hucklejohn's picture
hucklejohn
Status: Gold Member (Offline)
Joined: Dec 13 2008
Posts: 281
So where do we invest our money?

So the consensus on this site leans toward hyperinflation and/or U. S. dollar currency devaluation/collapse (although many are in the deflation camp) -- in short avoiding U. S. dollar investments.  Certainly precious metals, the mining stocks & mutual funds are suggested.  This leaves foreign stocks, commodities & natural resources as potential investment classes.   For these latter investment classes I believe many of us would like to know where to invest our money.  Does anyone have one or more suggested  mutual funds?   Or one or more managed accounts?  

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 348
Re: So where do we invest our money?

I'm very interested in suggestions that come back to your post.

I have had most all of my investment money in precious metals for several years, am starting to feel financially secure [and a bit greedy] and looking to diversify.

For now, for me, candidate #1 is Mish's outfit at

http://www.sitkapacific.com/account_management.html

Perhaps JAG will chime in re his experience w them.

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Re: So where do we invest our money?

Hucklejohn,

Thats the "$64,000" question now isn't it? Or more specifically, maybe the question should be:

How does one protect the purchasing power of their savings in this crazy market enviroment?

  • Its tempting to just put all of one's savings into PM's, but there are risks to this approach that don't really become apparent until you have put all your eggs into this basket. I have seriously considered this approach, but I'm afraid I might lose what little objectivity that I still have if I take this path.
  • Its also tempting to just sit in physical cash throughout this unfolding craziness, but then you have the currency markets to worry about.
  • The equity market (stocks, mutual funds, etfs, etc) is the traditional hedge against the inflationary mindset, but then you have this little historical observation called "mean reversion" to worry about.
  • Real Estate--see equities
  • Commodities-see equities
  • Bonds....this is the playground of the smartest traders. Since I have no experience in the bond market, I would be nothing but the dumb money in this market.

So where does this leave the average Joe. For me personally, the only viable means of protecting purchasing power is with active portfolio management. As Denny said, I have chosen Sitka Pacific Capital Management to manage most of my available capital. I'll give you a few reasons why:

  • Unlike mutual funds, there is an alignment of my interests and the manager's interests. This alignment is extremely rare these days and is the future of the business in my opinion.
  • Market Neutral Approach- some of Sitka's portfolios are actively hedged when the market becomes riskier. One of there portfolios is a long/short approach that has very little correlation to moves in the market, and even this portfolio is modified to take advantage of "beneficial" market movements.
  • Never Net Short- Even though some of the portfolios do well in a down market, they are never net short. This leads to more consistent gains in my opinion. 
  • Foresight- Sitka saw the crash in 2008 coming and prudently prepared for it so that they actually made money for their clients from this crash. 
  • Consistency-Even though they have only been around since 2005, they have shown that they can make money in both inflationary and deflationary market environments.

I haven't been with Sitka very long, but so far I really like what I see from them.

Hopes this helps in some way.

 

bluestone's picture
bluestone
Status: Gold Member (Offline)
Joined: Dec 29 2008
Posts: 263
Re: So where do we invest our money?

Hucklejohn

is the consensus for inflation? I've heard some compelling arguments for severe deflation (lasting anywhere from a year to several years), followed by inflation.  Im not sure exactyl how one would navigate that minefield.  To me it seems that it is important to keep at least of portion of your "wealth" out of the system in cash and in PMs. 

 

Brian

hucklejohn's picture
hucklejohn
Status: Gold Member (Offline)
Joined: Dec 13 2008
Posts: 281
Re: So where do we invest our money?

Thanks, Denny, Jeff & Brian for your thoughts.  Yes, SITKA, has several portfolios which appear very attractive.  I may go with SITKA at some point.  For what it's worth my choice would be a managed portfolio of foreign stocks in commodities and natural resources.  (I wonder if there is such a thing.)  I say managed portfolio because I would prefer to have someone else, an "expert" in these things make the buy and sell decisions, not me.  I say foreign stocks due to the clear long term weakness in the dollar (and by implication stocks quoted in dollars).  I say commodities & natural resources because the commodities bull market has (more than likely) many more years to run.   

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