Tuesday, October 23, 2007

Portfolio by Sector

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I did an in depth display of the portfolio this weekend, which I will do 1x a month - however bringing it over into a blog is pretty heavy work since the formatting is so screwy. Until I looked at it at this level, I didn't realize I was *quite* so heavily exposed to "energy"; so I decided to pull back on that sector somewhat early this week.

A bit of an easier approach and as they say, sometimes a picture is worth a thousand words (so I guess 10 pictures is worth my entire blog to date), is looking at sector representation in graphical terms. So I did that below.

Two notes: (1) I break up foreign holdings into (a) China (b) Indian (c) Other and (2) I did break up energy into (a) Crude related i.e. deep sea oil drilling, oil service, refining, seismic, etc (b) Coal and (c) Solar as the latter two are not directly related to crude oil.

I am doing this to keep you informed (and me); at this time I am trying to think ahead a year to a slowing global economy and which sectors will be the least affected by it. A case could be made that global infrastructure and agriculture will be the 2 stalwarts, the former due to enormous backlogs and the latter due to "once you let the genie out of the bottle of rural -> urban migration it's not going back". Oil is a toss up - while slowing economies will slow the demand, I still think finding new supply is getting tougher AND global urbanization is going to dwarf any economic slowdowns effect on oil in the mid to long term. With that said, you could see a lot more volatility in that sector. The same could be said for mining. At this time, the technology stocks I am in, feel quite 'isolated' from any major issues even in a global slowdown.

And let me be clear by global slowdown I mean China down to 4-6% GDP growth, about half of where they are now - I don't think they are going to 0-2% GDP growth with that huge savings glut and government initiatives to build out the entire country. Same with India to a lesser degree. I can see a future with the US in recession (or at best flat growth) and western Europe not too far off from it as they have major speculative housing booms as well (see Spain). So I am trying to position for the long run to match these macro views.


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