Another Reason for Tangibles

Colin Barr wrote an interesting article for Fortune last week, titled Lost decade? We've Already Had One. The article sheds further light on the blog post earlier concerning the increase in earning on the S&P 500.

GDP that stems from new debt — mainly deficit spending — is phony: it is debt-financed consumption, not prosperity. Net of deficit spending, our prosperity is nearly unchanged from 1998, 13 years ago. - Rob Arnott of Research Affiliates

The article reinforces our concentration in commodities and commodity-driven markets as the assets with the greatest relative strength. Domestic US equities substantially lag in strength and hold a minority position in the portfolio currently.

Subscribers will recall the importance of the low correlation between tangibles and intangibles. These two large market categories comprise the macro movement of the markets, as they shift over long periods of time from tangibles to intangibles. Those investors limited to only the intangibles of stocks, bonds, and cash are handicapped in all markets conditions.

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