outlook for gold?

[buzz]

Here's how I am looking at diversification...

-Domestic stocks...past peak, don't look good for the next year or so
-Foreign stocks...crazy gains recently, may be adversely affected by a US recession
-Gold...at a record high, time to sell, not buy
-Bonds...interest levels low, will lose value when interest rates rise
-Money Markets...probably another rate decrease on the horizon
-Real Estate...hmmm, REIT indexes down nearly 50%, may be a bargain

[Broken Arrow]

Scanner, I'm with you there. I think we are similar in that we are not willing to accept the fatalism, "Nobody can beat the market"... at least not without a fight. And that's fine. We are not alone.

But, again, I do think that we need to clarify something. Buy-and-hold is a long term strategy really, which assumes that not only is the market efficient, but that over the course of a long term, it will generally go up more than it will down.

But what you're suggesting now is a more active, buy-and-sell strategy that assumes the market is NOT efficient enough. Similar to Dogs of the Dow, you sell some "losers" and you pick up some that you think will be winners. I technically don't have a problem with a shorter-term investment strategy, but if you want to get active, my question then is, "By what valuation method?"

Ah... but that's the rub, isn't it? We all try, but in the end, nobody has a sure-fire, crystal ball method of divining the future... not even professional fund managers from whom we buy our funds from.

Still, I do believe in due diligence, not so much to actively trade (believe it or not, even though I talk about it all the time ), but to slim down diversification in order to increase potential return while mitigating some of the associated risk. AND, it's still done within the premise of mostly buy-and-hold (although I'm not against some active trading if opportunity presents itself).

I also think it's OK to hold a lot of funds, SO LONG AS they are non-correlated with one another. In the face of essentially investing "blind", it is best to diversify. However, if you are willing to put forth time and effort to light your way somehow, then I think we can slim down the diversification, which is what I am trying to do as well. And in that sense, I do think we have much in common and is what I respect about you: Your willingness to be innovative and not settle for spoon-fed answers.

[Scanner]

Broken Arrow:

I think it's not so much that the market is efficient but I have read that something like 80% of it's gains are made in 20% of the days. It's flat (or correcting) other days. And of course, you never know when the bulls will rally - 2 days in Oct. 4 days in Nov., none in Dec. or Jan or Feb. and then whoops. . .March has a 10 day bull run.

So, the biggest risk of moving is a "bad timing." It's not so much you hit a correction. . .you may miss a bull run and you are sitting on the sidelines.

As far as evaluating companies, that's something I can't do and don't understand. I think I understand commodity markets better than I do judging a company.

There's so much manipulation that a company is capable of, it's hard to judge fundamentals. With commodities, you have supply, inventories, demand, futuristic outlook, and investor demand creating a "market."

Things are easier to understand IMO, than people.

Now. . .sectors. . .I think that's easier to judge. I, for the most part, agree with the above poster on those sectors. I think he omitted the mother of all commodities - oil. There's a reason on Yahoo Finance everyday they post what oil does - because our world revolves around it.

I also think Domestic is of an average buy right now. America won't get any stellar returns with the way the dollar is but I think 7% is a reasonable expectation over the next 10 years.

[tripods68]

I'm not looking for the next bubble. All the investing I do is for retirement (long-term) purposes, and I re-shuffle things on an annual basis.

From what I've been reading, 2008 will be tough for US markets, recession or not. So, I'm planning something like this:

40% international (primarily Asia)
30% domestic (fusex, fcntx, flvcx)
20% bonds
10% cash

Feedback appreciated!

With the inverse relationship with falling interest rate = high bond prices, bond value will go up. To protect your asset from economic downturn, change your allocation higher percentage more on bonds (20% to 30% or even 40%). Your International exposure @ 40% may be a bit higher. I would probably decrease that to 15 or 20%, perhaps go Index (International) if possible than focusing on Asia alone. IMO