Core Positions

The 'core position' concept may be worth considering as we begin building the Haile Fund portfolio. Core positions provide strong exposure to asset classes or sectors being pursued by the investor. Usually, core positions are 'low maintenance' in that they do not require constant review and oversight. As such, time horizons associated with core positions are usually long term in nature.

When putting a portfolio together, I personally like to look for core positions early in the process. This is because core positions can serve to anchor my portolio in the asset classes that I am interested in. Once the portfolio is solidly anchored, then I can pursue other, more specialized (or speculative) positions that help tailor the overall asset class composition toward more specific views.

As an example, I would view the Rogers International Commodity Index fund (RJI) discussed yesterday as a potential core position in commodities because it provides broad, market weighted exposure to the sector. Once I have positioned a broad fund like RJI in my portfolio, then I can look for other, more specialized commodity investments, such as DBA (ags), JJC (copper), or GLD (gold), that better express my preferences toward specific commodities.

In equities, core positions are often reflected by large cap stocks that dominate attractive industries. Due to its size and influence in the tech sector, Apple (AAPL) can be considered a core equity position.

One problem I often encounter with acquiring core positions is that they are often overpriced (from where I sit, anyway). Two strategies that I use to cope with this problem are a) sit on my hands and patiently wait for the security to be put 'on sale' by the market (this happens more often that you might think), or b) take a small position now at the current price with plans to add more shares if/when price goes lower.

Recently, I have employed strategy b) to begin building core equity positions in my personal portolio (I have not owned stocks for quite some time). I have initiated small 'starter' positions in a few large cap tech and healthcare names such as Microsoft (MSFT) and Johnson & Johnson (JNJ). My work suggests that these names offer decent--but not great--value here. These starter positions give me initial exposure, while leaving the door open for using lower price to my advantage to build more meaningful core positions down the road.

Should stocks rip higher from here and never look back, at least I have some core exposure that will allow me to participate.

Anyway, you might find the core position concept useful as you search the investment landscape for ideas.

positions in GLD, JNJ, MSFT, RJI

Weak Economic Indicators

Some measures suggest that current economic recovery is on weak footing. I found the petroleum data particularly interesting.

position in oil

Jim Rogers Video Clips

During class we discussed Jim Rogers. I pulled a few snippets from youtube in case you want to get a sense of the guy and how he thinks.

Bloomberg interview on commodities--oil, gold, silver, ags, and offsetting that w/ short exposure. He's also long the US dollar for a trade.

My friend Jeff Macke interviews JR on the Fed and other matters.

Part 1 and Part 2 of CNBC interview Japan disaster and investment.

Last week, Kudlow interviews interesting panel including JR.

There are plenty more if you have interest...

position in commodities

Stock Markets vs Futures Markets

Interesting comparison of stock markets vs futures markets. One thing that seems pretty clear is that advent of commodity ETFs has altered the structure of commodity futures markets.

Dollar Weakness

It's getting close to fish-or-cut-bait time for the US dollar index (USD). The USD has been in a decade long downtrend. (offline, compare the 10 yr USD chart to a chart of gold over the same time period)

On the back of QE2, the USD is once again probing the lows for the move. Near term support resides right around here at about 75ish. Below that rests the 2008 lows at 71-72.

If that support gives way, then it'll be a brave new world...

position in gold

SPX 1300

Interesting battle shaping up here at SPX 1300. The S&P 500 has rallied over 30 handles in three days.

It is now hitting its head against resistance at 1300, which also corresponds to the 50 day MA.

I added some short exposure in here given the tight defined risk parameters. Should the SPX decisively chew thru resistance here and motor higher, then I'll humbly stop this trade out.

position in SPX

FDIC Rate Page

Need to know current rates on CDs? The Federal Deposit Insurance Corporation (FDIC) reports weekly national averages for rates on money markets, CDs, and other deposit products.

As you can see, yields on deposit products remain low.

position in CDs