- Massive QE and undertaking by Eurozone and Japan, which is an experiment never been done before
-Potential tightnening of U.S. monetary policy
-Lower oil prices which can cause high yield energy companies and oil producing countries to go bankrupt, which might have contagion effect (who's holding these risk?)
-China's bubble economy (shadow loans, over investment in real estate)
-Web 2.0 companies evaluation . We are again seeing companies trading at 70 P/E with little or no earnings
- Greece defaulting for the 100x. At this point they should default and leave the Euro. Take the high road and reform the economy like Iceland did post-2009
Tailwind for the economy:
+Lower oil prices mean consumers will benefit via perceived wealth affect. Consumers spending will likely ticked up
+Lower oil prices also is a deflationary force, which would keep the Fed from tightening monetary policy by raising Fed Fund Rate.
+Full employment. Although many would argue most recent hires are working for minimum wage or part time jobs, the employment picture is relative better than same time last year and 5 years ago.
+Technology and innovations continue driving human productivity. Our lives has gotten so much more efficient through the use of technology which has enable us to do more per hour. The downside is the shift in the economy. Manual workers are becoming history - how can these guys retool themselves for the new economy?
What am I doing with my portfolio?
For my 401k:
-Max contribution for the first year
-Allocating to 50% U.S. Treasury fund and 50% S&P 500 Index fund
-Only buy S&P 500 Index when VIX is above 17
-Contribution bi-weekly automatically. Assigned 50% cash and 50% U.S. Treasury fund. Re-balance to the planned 50/50 allocation when VIX is above 17 - looking for opportunistic buy
For my personal and IRA portfolio which is currently heavily invested in energy stocks:
-Will look to buy quality names as oil prices continue to drop
-Expecting $30-40 crude oil prices by spring
-Favorite name: EOG
-Current holdings: SU, IMG.L, LULU, CHK
-This portfolio has under-performed the market 2 years in a roll. Maximizing 401k would leave me less money to contribute to the alpha and IRA portfolio.
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