I finished my investment policy statement (IPS) template this week. I have the standard language along with a portion which is customizable. Now that it is ready to launch, I am faced with a challenge because an IPS requires you to maintain certain allocation ranges. So, if you want to venture out beyond these ranges, you would have to revise your IPS. Today I'd like to venture outside these boundaries, namely increasing exposure to alternative investments. This is because no matter how the stock market is performing, there is always money to be made somewhere. Currently there are opportunities in commodities, shorting financial stocks, currencies, and of course CDs to name a few.
I am looking into an ETF which shorts financial stocks. Over the past 30 days its NAV has risen from $110 to $150! Am I too late? Have financials bottomed? I don't think so. My reason, you ask? About 60 days ago, I heard Jamie Dimon, CEO of JP Morgan, say he thought we were about 80% through the credit crisis. I remember thinking, "He's a smart guy and probably has more of the inside scoop than I do." I also remember thinking how I didn't believe his statement either. I think we have a great deal more to work through as companies continue to deleverage their balance sheets. In other words, I think there's much more bad news to come.
