Friday, 22 May 2020

Weekly links...including a new asset allocation 'rule'

By far the most thought provoking graphic I have come across in recent days has been this one:

Admittedly a ratio between a major US equity index and the gold price is hardly rocket science but it certainly made me think - as should most graphics with a time duration of over a century.  Looking at the ratio (and the 'traffic light' colour lines) should give you an instinct about how to think about shares, green for 'go' and above red for 'more caution'.  I looked on the graphic though in a more nuanced way - which feels relevant and correct for today's world.  A lot of people have asked me what I believe a correct gold holding in a diversified portfolio should be currently.  I tend to end up saying 'about ten percent', which got me thinking about the above ratio, mainly because today's approximately x14 ratio between the absolute level of the Dow Jones Industrial Average and the gold price (both in dollar terms) is about the same number as the percentage of my pension fund I hold currently in gold and cash combined i.e. essentially my non-equity positions per se.  And then when I traced back the line over the last nearly 24 years I have been involved in the professional investment game, I realised it told me about the right percentage over that period too, building up positions when more prudence was required...and building them down when equities had more natural attractions. 

Something for me to keep an eye on...among everything else. 

This week I appeared on the VOX Markets podcast here where I talked about some UK stocks that were reporting plus generally updated some general thoughts on the markets. 

On ShareProphets three of my favourite articles are...

Do I pony up for more Whitbread stock?

Chillax Imperial Brands shareholders, your dividend is not (completely) up in smoke...

Intu plays the zombie card...

...which you can read here, here and here.


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