"Where should I invest?"

Asset allocation pieces have a grand and long-standing tradition in big banks.

They pop up at the beginning of each quarter and remind us about the most important investment decision we must make: portfolio allocation.

So here’s 6 profiles of portfolio allocation - each one with its own merits:

Cash is king: 100% in cash. T-Bills give you 5.4% yield. With inflation falling fast, that’s not a bad place to be.

Treasury Bug: 100% in 10Y Treasuries. The end of the hiking cycle is in sight AND it’s entirely possible we see rate cuts next year. Long bonds do well in this scenario, and give you 4% carry in the meantime. Treasury bugs will hold on to their USTs until they can buy the market at a much cheaper P/E.

Risk Parity: [60% in Treasuries] + [40% in your favourite stocks]. Risk Parity’s century-old track record is stellar, and long-term investors do well to trust it with their savings. In terms of what stocks to add, we’ll discuss it tomorrow but the whole market is your menu, from strong momentum in tech to deep value in other sectors.

To the Moon: [30% cash] + [70% of your favourite stocks]. Who said the bull market is over? Cassandras have been complaining about expensive stocks for months and yet here we are at SPX 4,500. Just keep some cash to buy the dips.

Going Nova: [80% in your favourite stocks] + [20% in crypto]. The way to long-term returns is long-term risk-taking. “No pain, no gain”, that’s the philosophy. You got to keep the pedal to the metal all.the.time. if you want oversized returns. 

The ‘Warren Buffet’: 200% in your low beta stocks. Buffet is not a value investor, he’s a low beta investor. He buys low-vol stocks on leverage, trusting the best US companies not to go bust. Worked well for him for a long time.

Platinum.

 Today is a second entry buy day. 

Platinum.

 

• The silverish-white metal is often used in “catalytic converters” that reduce harmful emissions from fossil fuel vehicles.

• The global platinum market is expected to rack up its largest deficit since the 1970s as the world’s largest producer, South Africa, battles with power outages.

• South Africa accounts for 70% of global platinum output, and its annual production amounted to about 140 metric tons amid shortages in 2022.

• According to The World Platinum Investment Council (WPIC), global platinum demand should surge 28% this year to 8.2 million ounces as more automakers replace expensive paladium with platinum in car catalytic converters.

• Metals Focus added, "With power outages in South Africa limiting supply, the global deficit could increase to 953,000 ounces from 53,000 ounces in 2024.”

There is now an alternative, there is simply no reason to chase performance... (bearish) investors can park their cash in money markets, receive an annualised yield of 4/5% and wait for the recession to arrive in the data.

"Palantir Technologies CEO Alex Karp announced that they anticipate turning a profit every quarter in 2023, fueled by the overwhelming interest in its new artificial intelligence platform. The result? Palantir stock (PLTR) soared over 20% in extended trading.

The Palantir Artificial Intelligence Platform (AIP) integrates AI into military decision-making, allowing military operators to utilize AI in their operations. The company is known for its contracts with the U.S. Central Intelligence Agency.

Karp commented, “The demand I've seen for our AIP platform is like NOTHING I've seen in the past 20 years." The rise of ChatGPT and LLMs has, without a doubt, been good for Palantir’s business."

What recession?

New ATH

Iris Energy

Ranges are more common than breakouts. Aproximately 60 % of time markets go nowhere.

"Silver"

Silver is the alt-coin of precious metals. The market structure is extremely bullish with: -Commercials with historically small short book -Hedge funds are on sidelines with buying power -SI has taken leadership among PMs -Open interest is extremely small (public is not in yet)

"Where is the money?"

 The US military-industrial complex is making massive gains as a result of the war in Ukraine and other global conflicts, with weapons manufacturers enjoying soaring profits.

Data released by the State Department shows that US weapons sales to other countries rose from $103.4 billion in 2021 to $153.7 billion in 2022.

 

Accept that price is unpredictable. Don't fall into the trap of thinking you can predict the market. Instead, focus on managing risk and dealing in probabilities.

Uprise, by asking yourself "Why?"

Someone once described it this way: Sometimes you can be too focused on climbing the tree, and not focused enough on whether you're climbing the right tree in the first place!

It's funny how many books and courses and videos there are to help you become a better investor, but very few of them help you figure out the "why".  And that's arguably the most important question of all.

I hope you can spend some time this week thinking about the why.  We can do all sorts of things to help improve your decision making, help manage your portfolio risk, help minimize the impact of behavioral biases, help improve your investment returns.

But first, you need to think about the Why.

"Trend trading strategy"

 

"survivors"

 

"Many traders seem to use data on the economy, interest rate curves, volume or other things to decide where prices in their markets will go. I just look at the price and let all that other data be what it is. It may or may not influence prices, but if I just concentrate on prices, I’m tying my actions to the one thing that either makes a profit or loss in my portfolio. There’s less likelihood of being out of step with whatever the market is currently doing."