Toby Lopez       

This is a dummy portfolio where I put to practice what I read about the markets.

Current market view (14 Nov 2010) - Inflation or deflation - short term deflation long term

inflation.Let me make one thing clear - I am in NO doubt whatsoever that Bernanke will

print and print and print.So I am long commodities and gold although a short term

correction is expected.When that happens Bernanke will launch QE3.Rinse and repeat till we

have inflation.

What went wrong with the portfolio ?

It is only by looking at the mistakes that one learns anything.

1.if you ask me what is the single most important lesson you learned from the sea of red -

it is this ,hold few positions and know them well.The more the number of positions the

greater the risk of things going wrong.Yes,I know it goes against portfolio theory but a

favorite quote of mine " diversification is no hedge against ignorance".

2.Shorts -short etf are not buy and hold funds - they are strictly for trading.I know it is

obvious but it wasn't for me.That said I am still bearish about stocks.Bill Gross summed it

up " there is a lack of global aggregate demand".Is the US economy really recovering ? I

don't think so.For it to be convincing small businesses need to recover.The November NIFB

report does not suggest a recovery.

But if stocks go down,Bernanke will print.So asset prices could have a floor.As one can

clearly see,I don't really know what to expect but I just don't see how people up to their

eyeballs in debt are going to spend.And I never believed in the decoupling theory.

3.Technical analysis matters - buy based on fundamentals and technicals,sell on technical

weakening.

4.look at different approaches - my strength is macro analysis but relying only on it can

be fool hardy.So I need to learn many approaches including bottom up analysis.

5.Indexing is not all that it is made out to be.Case in point the s and p over the last

decade went no where.Low fees is not the only criteria.