Portfolio Update - 12/4/2009

Well, I've been managing a portfolio for a couple of weeks now. Sorry the updates haven't been posted like I had hoped, but now that I have a little more time I can start posting more consistently. Here is the link to see my portfolio:

http://www.kaching.com/portfolio/83948/holdings

There you can see my portfolio holdings and my performance against the S&P 500.

Currently we are still betting on a sudden change in the market's intermediate term trend. I still very strongly believe that the U.S. Dollar is going to see a massive rally and with that the stock market will take a tremendous hit, eventually seeing new lows.

I am positioned with a large portion of my portfolio long the U.S. dollar and long-term U.S. treasuries. I also am short a few financial and commodity related companies that I feel will be hurt in a deflationary environment.

I am, however, going to maintain a large portion of my portfolio in cash. If I sense a continuation of the current market rally I can use this cash to buy a position in the S&P 500 to hedge my short exposure and minimize losses.

Quote of the day...

Paying taxes is necessary to remain free; don’t confuse this with slavery where people have to purchase their freedom…

Dollar Rally Looks Imminent

There are a number of reasons for the U.S. dollar rally right now:

• Extreme dollar pessimism (only 3% dollar bulls)
  
• Euro overvalued
• Other countries, such as Great Britain extending their quantitative easing (printing money) programs, the U.S. did not.
• Gold is extremely overvalued. They are pushing gold on television, if that is not a screaming sell signal I don't know what is. The gold trade is wayyyy to crowded.
  
• strong deflationary headwinds in the economy (rising unemployment, retrenching consumer, banks are ABSOLUTELY NOT lending....etc..)
• Should the market fall (and it will) the dollar will rise because of the huge margin calls needed to liquidate assets fast, and the urgent necessity to raise dollars to settle dollar-denominated contracts. In other words, another severe financial crisis could lead to another short-term dollar rally.
• Also, the technical picture supports a rally in the dollar....as expressed by the chart below

Key Point: if you are long commodities stocks, gold, silver, or anything else that is sensitive to a rise in the value of the U.S. dollar I would be VERY cautious.

Dollar Bearish ETF (when it falls dollar rises)

Gold trying to breakout.....this isn't good!!!

GOLD

U.S. Dollar