Thursday, April 10, 2008
I have noticed an interesting tone to some of the comments in the last day or two, no not referring to the attire of any TV personality on any of the business networks, about indecision and owning cash.
One point I have made many times over is that no one can have all the answers all the time.
One thing that has generally been working this, in terms of smoothing out the ride, has been absolute return products.
Not that they are not down but many seem to be down less or up a little. Down less is a valid goal for a down stock market and if you can find one or two things that are up, all the better.
Conversely there are some things that you should not think would have a shot of going up in a down market. One name in my ownership universe along these lines is the Vietnam Opportunity Fund that I have written about a few times. YTD the Vietnam Index is down 42% while the fund is down about 5%. Part of that could be to the fund having a 7.5% premium to NAV as of its last reporting date. The fund holds a lot of other things besides equities and so it doesn't always correlate.
It is probably a lucky thing the fund isn't down more but if it were that would not be the important thing. This is the time for less exposure to this sort of thing and more exposure to cash or whatever you think of when you think about what to do if you are one to take defensive action.
A little exposure to a frontier market now is not the worst thing in the world but increasing the allocation now if you aren't prepared for another 20% down is probably a bad idea. As global markets start to show signs of sorting themselves out it might makes sense to increase a little, for anyone inclined to invest in frontier at all.
Tonight is the frozen four semifinals, talking college hockey here. The action is always good so if you've never watched, check it out.