I can't seem to reply comments made on my posts. I've had one comment asking me about whether Asian bonds are a good hiding place. My answer is, "it all depends". If you're just gonna hold on to yields, dividends, coupons, whatever, and don't care about mark-to-market losses, then go ahead. But if you wanna make some real returns; i.e. capital gains + yields, then don't.
The reason is simple, I won't touch convertible bonds, pref shares at this stage. Euro pref shares have a high chance on not paying dividends, although I don't think any major Euro bank will default. But there will be massive mark to market losses, mark my words. the last 3 weeks have seen massive outflows from emerging market local and foreign currency debts.
Gold is very volatile. I will cap it at no more than 30% of the portfolio. If the recession cannot prevent a deflation, like in Japan, then I'm sorry, gold may fall by 35% like it did in 2008. So far it has fallen by 20% so there may be 15% more downside to go. But there's a caveat; gold fell by 35% prior to QE1. In this age of QE, gold may not have such downside.
I like CTA. I continue to believe that CTAs like Winton and Man AHL Trend will achieve 10 - 20% in a bear market. Nothing makes money in distress like trend followers that can short all assets. I am shorting myself. I've shorted Direxion Triple US Small Caps from 60 to 35 now. That's a very decent return over 6 months.
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