Well I was clearly wrong about the equity buy signal in early March. Fortunately I didn't buy much, only two deeply discounted closed-end funds, Source (SOR) and Tricontinental (TY). Of course, as Bill Gross realizes and has put into print recently, a lot of other assets more or less track equities: corporate bonds for one, but also closed-ends of all sorts, master limited partnerships, pass-through trusts, etc. Unfortunately I sold the VXX too soon. But given my diversification and fairly short duration exposure, I only lost 2% from my high on March 7 to my low to date on March 16, and I gained back a good bit of that on March 17 and 18.
I have two news tickers going at all times, but I try desperately to avoid changing investments on the basis of news. Sometimes news causes short term market moves, and these can be useful for entering new positions or exiting old ones. I've been interested in investing in Japan for some time and already had a small position in Mathews Asian Growth and Income Fund (MACSX) for about a year and the Aberdeen Asian Income Fund (FAX) since February, the former in taxable accounts, the latter in tax-deferreds. During the Japan plunge last week I bought an initial small position in Morgan Stanley's Asia Pacific Fund (AFP) which is ~45% in Japanese stocks, and I bought Daiwa's Japanese Equity Fund (JEQ), both for the taxable accounts. Depending on how things go I may also buy the Japanese small cap fund, JOF. My feeling is that Japan has wrung out a lot of fat since 1990 and is fairly well priced.
Several books I've read the past few weeks reinforced my "feeling" about Japan. Michael Murphy's "Survive the Great Inflation" did so indirectly, and David Skarica's "The Great Supercycle" directly recommends Japan for the same reasons I am drawn there. Mainly, when one looks around the world there is little that is underpriced. I am not a big fan of equities in general, so I am not going wild on this. It may not even turn out well, but I'm going to give it a chance for a little while. Japan clearly has its work cut out for it, but perhaps that is what will jolt Japan out of two decades of denial and lethargy. They are a great and a rich country, and, as we are in spring baseball season, which they love as much as we do, it's time to "step up to the plate".
I also took advantge of the silver stumble to buy some AGQ which is leveraged to the silver price. I remain convinced that the inflationary trend is still in effect. In support of another aspect of that belief, I established positions a while back in variable interest rate funds: PFIIX, FFRHX, PFN, EVV and bit of AEB. The first two might close to new investors at some point so I wanted to have a toehold in them. I have plenty of PTTRX, PIMIX, LSBDX, VWEAX, VFSUX and VFIJX which could easily be be transited to the variables if and when conditions warrant.
Watch and wait is my current mantra. So far I am up only 1.12% on the year (5.29% annualized) which hasn't kept up with the US dollar melt down, despite my gold and the precious metals stocks. Of the 50 largest US mutual finds, posted each day in the local newspaper, only 20 have returns to date over 2% this year PTTRX is up 1.2%. I always have a slow start to the year.
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