I realize that I haven't posted in some time. It isn't because there is a shortage of excitement in the market. It certainly isn't because there isn't any news-- turmoil in the middle east and the triple disaster in Japan are enough to make anyone wake up. In spite of these disruptions in the rise of the market, there has been a shortage of interesting opportunities.
As I discussed in a previous post, the market is too expensive for me to be comfortable. Over the last few months, I have been selling into the rally.
I am not selling indiscriminately, I have been selling only securities that reached and exceeded their fair value. Since the US Fed induced rally began in fall 2010, practically anyone who owned stocks, as benefited greatly.
Rising tide, does indeed, lift all boats.
However, some boats rose higher than others. Commodities based stocks have greatly out-performed some of the more boring, stable businesses. Essentially, classically "risky" investments have benefited more from the rally than boring ones.
So where does that leave me?
I find myself holding about 45% of my portfolio in cash, due to lack of juicy opportunities. The other 55% is in stocks that have an excellent to decent margin of safety still intact at current market prices.
The one [minor] fear that I have for the cash portion of my portfolio is the onslaught of inflation. Holding gold or other inflation hedges are too risky for my taste. If I can't value it, I don't want to be owning them. Gold clearly falls in that category.
