Given you can’t sit on cash and watch the market run for 7 more years, where do you blindly put ten+ year money while you look/wait for good opportunities? GAL maybe if you already have quite a bit of US exposure…
I’d put some in foreign equities. Some in oil/gas related entities right now (maybe would wait untl after the OPEC meeting). And I’d put some in Lending Club loans (which have a maturity of 3 years, giving you time to think about where to put the money or reinvest in more loans.)
Cash isn’t the worst place to be actually, you will have money ready when it all blows up…snag the good deals.
I’m building up a fixed income portfolio for 2015; variable rate preferreds, fixed rate preferreds that are high coupon 2-4yr callable, high yield with 1-5yr maturites. Collect income for the time being, wait for opportunities…
No more than I do any of my other investments. It just stands out because it’s unique. It actually negatively impacts me the more people who invest (based on current dynamics).
That’s the point. How long can you wait in cash? We don’t live long enough for all the iterations to play out. Hard to find great opportunities on jan. 1 2013. Even harder now. And an investor missed out on a 50% move since jan 1, 2013 if they were waiting for a sale. Have to hold your nose and always have exposure. Overweight, underweight, sure.
I disagree with Palantir here. If you had a 30 year time horizon, yes, go ahead and eat lots of beta. But it’s very posssible that in 10y we’ll find total returns barely keep up with 10y US Treasuries, and with a lot more risk. On the other hand, if you have a decent amount of cash lying about (or even 10y USTs), there’s a good chance you’ll have some cash around to buy after an interim market crash, when forward-looking returns are far more promising.
The market looks like it’s unstoppable after 5-6 years of amazingly good returns, but it’s precisely when it seems unstoppable that things are most risky.
Go ahead and have some equity exposure, but I wouldn’t throw everything at equities (and lever it) as Palantir suggests.
I think you are dreaming but I guess that’s what makes markets.
Small caps are in a mini-bubble, I would be very careful with the IWM right now. I don’t do ETFs so I don’t have anything more constructive than that to add, but I can tell you with certainty that the very smartest small cap funds in the country are all playing defense right now.
But how do you invest right now when there is so much manipulation going on (first QE, then Abe, and now Europe is talking about it). All asset prices seem bid up, not just equities. It’s why I’ve focused more on being long consumer credit, because I just don’t know how to interpret all this mess. I read one quarterly letter by a value investor that was considering going like 50% in cash.