May 06, 2011
I had no intention of posting at all, but events keep dragging me back in. I want to at least keep somewhat of a record of the wealth portfolio performance, if for no other reason than to be able to blast a big fat fucking I TOLD YOU SO into the void at some point. So, I'd be remiss not to at least acknowledge this week's carnage in the commodities markets.
It's happened before and it will happen again -- commodities are extremely volatile. Since my call to rebalance on 4/27, silver is off over 25% while gold is down a mere 2% or so. My market timing is rarely that good, but silver was just crazy and $50 is a big number, so I don't think it was too hard a call.
This sell-off brings things closer to a much more sustainable annualized rate of return, especially vis-a-vis equity indicies. Even though silver is down a ton in a very short amount of time, it's too early to rebalance it back yet. There's a very good chance of more downside to come. A lot will depend on the equity markets and the relative USD performance, especially vs. hard commodity currencies (CAD / AUD).
In any event, since QE2 start, total performance of the wealth portfolio is 27.1% (vs. a peak of close to 40%). Total performance of the blended stock market is almost exactly 12%. It's nice to still be up this much after that solid a crushing. The effect of the debt ceiling 'debate' (really a foregone conclusion with a lot of associated theater) on everything will be interesting. As we're pressed up against the ceiling already, Congress had best get their sorry asses in gear.
Looking back to my post from 1/6 on what I thought might happen, point 6 is notable. We got to right around all those levels at the recent peak, well before I thought would happen. If the commodity space takes off again after the debt ceiling increase, look the fuck out.
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