Weekly Risk Report 11/30/2009
As November closed we saw the continuation of the surge in Precious Metals price appreciation. With the continued strength in this sector, we also continued to manage the risk of ownership by trimming the position to keep a relatively constant dollar value exposure. The graphic shown below indicates the various adjustments adds and trims during the last year or so.
For the stock portfolios November was positive and regained most of the ground that had been given up in late October. Income portfolios continued to bring in dividend income, while the inflation indexed bond fund rose enough to generate some profit taking.
Our market risk indicator continues to show good potential going forward should short term interest rates remain low. Looking out 12 months, we believe much depends upon the interest rate environment. The 13 week Treasury Coupon is currently has a remarkable 0.041% per annum yield! Even extending our focus to the twenty year adjustable rate mortgage yield is only 4.19%. If we assume interest rates are a “supply and demand” measure, there would appear to be lots of supply and not much demand.
In the mean time, speculative activity in the major exchanges has moderated from the previous months. This pause was necessary and healthy for the markets in general. Even while cumulative breadth has flattened out we still see more new highs than new lows over the last 52 weeks.
The majority of our portfolios’ positions remain closer to their next sell targets than their buy prices. Even a relatively small yearend rally will trip incremental selling. We continue to monitor all sectors closely.
