Two days ago, I put out two posts here. One needs little further comment beyond reiterating the title, which was "Metals Comments: Silver and Others Breaking Down Again". No change there. Just to add that I think that oil works lower yet. Do I hear $60/bbl (WTI).
The other was about Deere (DE), AAPL, and GARP investing. Anyway, I went ahead that day and put in a 5% portfolio allocation to DE and more to HP (Helmerich and Payne), and more to AAPL. When DE and HP had strong upside days yesterday in association with the VIX dropping to 17, I got nervous about this ultra-rapid drop in the VIX from 27 to 17 even as the macroeconomic data was getting worse and Spain was now clearly insolvent. So I took a one-day, 3% profit in DE and dumped HP for a profit. I love the company but hate commodities right now, as per the above-mentioned post. Anyway, I also markedly decreased my longs in AAPL and took profits in about half of my bond-like stock plays, the utilities, beginning this morning and continuing through the downturn today. Europe continues to remind me of the U.S. in 2008. There is both a solvency and liquidity crisis there. The global macroeconomic spillover is somewhat negative for the U.S., though decreased European demand for resources will help us with imported oil prices. Probably more important is the liquidity issue. Who knows, but I continue to fear a recurrence of 2011 or worse.
In the meantime, daily consumer spending per Gallup.com has collapsed to $68. This is below the level at the same date last year and a full 27% below the level seen on-- are you ready-- October 27, 2008, a month after Lehman/AIG. And, it is not adjusted for inflation.
The times are out of joint. The plain vanilla Vanguard long-term muni bond fund VWLUX has had a total return the past year of about 14%. The leveraged Nuveen muni bond fund NIO has had a total return of about 18%. The zero coupon long Treasury has returned well over 50%. Meanwhile, the SPY has returned about 4% with much greater volatility. More relevant, I think, to economic conditions here in the U.S. is the Russell 2000. Its ETF, the IWM, has had a negative twelve month total return of 4%. All this interest rate decline is what in my view has been sustaining by stocks and the economy. But said rate decline is played out, one would think.
I have had a very good twelve months and a very good 2012. It's feeling like a good time to do what I hate at a time of ZIRP and positive CPI, but I'm going to try to stick to my mid-year resolution and sit on this lead with a lot of cash in my trading accounts (self-directed IRAs). Everything except AAPL that does not look overvalued acts badly, and things like T-bonds and AMZN that act well look overvalued. Strange days...