Sunday, December 8, 2013

Week 49 / 2013 Update

So, hopefully I can make this a mainstay in my investment journey. Once a week, update the moving averages of my portfolio funds to see the momentum and check on drawdowns in asset classes to look for a bottom.

First up, the moving averages.

The changes are as follows:
  • Asia ex Japan is bumbling up and down it's 50 and 200 SMA's.
  • Real estates securities are now pretty much down in the dumps
Next, the drawdowns of the funds that I follow. I have included funds that don't have a long history into the previous bear market (so no data from the start of '07), so I have included their portfolio benchmarks to serve as proxies. Surely it is not a perfect fit, since some fund managers may mitigate risk better or worse than their benchmark, but it's a good ballpark figure to work with. Note for corp bonds, I took a 50/50 weighted portfolio of CORP and CIU, since there isn't really a good proxy for it as it currently stands.

The most noticeable are:
  • Gold & Gen is almost at 90% of it last drawdown
  • EM Bonds are almost almost 90% drawndown from it's last major correction in '08
So, what do these tell me?
  • Real estate is not doing well, and it has a lot more room to fall, especially if it happens in conjuction with both taper and a stock market crash
  • Asia ex Japan is consolidating, but not much to worry about as long as it is range bound. Still collecting dividends on this, so it should be all right
  • Bonds are overall still not looking good in terms of momentum
  • Gold has more room to fall, and I suspect that it might be even deeper, considering the heights that it fell down from. However, that being said, it looks very attractive at these valuations, with the risks of portfolio loses seem to be capped at 20%
  • For EM bonds, we have got to see how taper affects bonds as an asset class
With that said, I'm still holding on my horses. I have mentioned that I think that gold will bottom out end of the month or in Jan to about a rough 1145-1180 range. Maybe the S&P will hit 1850 then. After that, I'm looking for at least a bare minimum of a correction, if not, even possibly a crash. Those levels will make me a lot more comfortable pulling the trigger and setting my plans in motion.

That being said, the data coming out of economy in the US is holding up surprisingly well, despite fundamentals. I wouldn't let up most of my sensitive positions unless I can really feel a dangerous cloud looming, which I don't see in the near term future.

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