I am bullish for the first quarter of 2009. I am expecting a short termmarket pull back. But I do feel that the market will resume its rallyto higher ground before it ends. I will take profit and hedge moreagainst downside as stock market moving higher approaching the end ofthe first quarter.
Current market rally is based on hope of Obama's new administration andthe illusion that, all bad news has priced in. I will not buy into it abit.
However, this rally is not where the true danger lies. I believe that,the true danger of this bear market could be at the late second half ofthe year. I expect a false economic recovery which will lead to a muchmore powerful bear rally before it goes lower. I still keep my originalestimate that, market will not bottom out before mid 2010.
The last couple of months, Cash was king. And cash still is king beforehyperinflation kicks in. Therefore, I will always keep certain amountof cash, in my case, no less than 30% at any time. All those cash willbe spreaded out into different accounts within US and in Hong Kong, asprotection.
As I have stated many times, US treasury bond is too expensive to holdnow and I am selling them in big trunks. To park those cash, I spreadedthem into TIPS, short term bonds, muni bonds, Australian dollar andRMB, and gold. And I have also dispatched some of the cash into BRK.A.
I will not touch RE for now, either within US or China and Hong Kong.Not until year 2011 time frame. Any investment portfolio should haveRE. But this is not the time to buy more yet.
Oil and commodities:
Besides demand and supply, oil is played with the heavy hands ofinternational politics, US politics and short term marketmanipulation/speculation. The current oil rally still has some steamand upside. I expect a pullback to retest the low before it resumes itslonger term rally.
Nonetheless, one thing we need to keep in mind is, the world economywill recover, US dollar will depreciate greatly, hyperinflation willkick in. And the demand of oil and commodities will return well aheadof the economic recovery.
As I have stated recently, I am optimistic for oil price recovery and therefore I have a personal so called 5-year plan.
Following my own view, I will not be a trader in this sector, instead,I will be an accumulator. Any large pullback will be my accumulationopportunity.
In general, before the economic picture and market scene is clear, Iwill be very cautious and therefore my main theme of 2009 is still, topreserve capital and be patient. I will only be a bit more aggressiveon oil, gold and commodities. However, I will not over allocate mymoney to any particular investment instrument and any particular sector.
This is solely my own view and my own plan. The view could be wrong andthe plan might not work out. However, without a plan, you will hit awall.
Life is short, thus, a simple plan is good enough.