Friday, August 03, 2007

Tough Day - Tough Week!

Wow! After today’s market declines I am glad I cut my stock position a few weeks ago.

My current asset allocation is 42% cash (and Treasurys), 36% real estate, and 22% stock.

I am starting to regret not selling the last of my stock.


At August 11, 2007 12:40 PM, Anonymous Anonymous said...

78% of your port is either yeilding 5% (cash) or severely underwater and still declining (RE), and you are gnashing your teeth over a short term, buying opportunity correction in equities?

At August 11, 2007 11:09 PM, Blogger zephyr said...

I am not gnashing my teeth – I am just lamenting that I did not sell more of my stock at the market top. I believe the top has passed.

My real estate is not underwater at all. It is true that my property portfolio is declining in value, but on average it is still worth multiples of my cost basis, and the cash flow is very positive. I also have very little debt, and could pay it all off tomorrow if I wanted to.

I agree that the correction will create a buying opportunity, but it is of little benefit to those who ride the correction down. I am positioned to take full advantage of the correction by being in cash before the decline. By doing this I should avoid the losses of the downturn, and then buy back in at the bottom, as I did in the last cycle.

At August 12, 2007 1:09 AM, Anonymous Anonymous said...

The value of your RE holdings have been declining for 18 months, and will continue to decline for at least that long. Consequently, you will not revisit your RE highs for another 5 years or more. Equities, on the other hand, will regain lost ground and hit new highs prior to years end.

"The top has passed"? Not by a long shot.

By being so heavily in cash you have missed a nice run up - even considering the latest hit. A plain vanilla portfolio of Total Stock Market and Total International Market mutual funds is still +6% YTD. Add in a couple of sector funds and your up well into the mid teens - YTD.

And those of us with substantial monthly investable funds who have sat out the last two months (and will continue to sit until volatilty subsides) do have cash with which to go bargain hunting. I've spent the last 6 hours making a list.

God bless over leveraged hedgies and moronic mortgage brokers.

At August 17, 2007 10:59 PM, Blogger zephyr said...


The general market has now given back the gains you cited above, and is down substantially from its peak in July.

I agree that buying opportunities are coming, but I believe that waiting will be rewarded for a while.

At August 21, 2007 12:40 AM, Anonymous Anonymous said...

The portfolio is up 6.85% YTD as of 08/20/07 - far off it's highs yet still far better than cash, not to mention your ever-declining RE. I believe the next 30 days or less is the buying opportunity in equities, and that the market will regain and overtake it's previous highs by year end.

At August 29, 2007 7:36 AM, Blogger zephyr said...

The share prices of the stocks I sold have declined by an average of almost 20% since I sold them. So, I am feeling pretty good about my decisions to sell.

I agree that a buying opportunity is coming. It is likely that the market will recover when the Fed cuts the Federal Funds Target Rate.


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