Monday, April 6, 2009

Asset Allocation based on Mohammad El-Erian

Here is an interesting article regarding an asset allocation model:

The author bases his ideas on Mohammad El-Erian's proposed investment model. Mohammad El-Erian was Harvard's former endowment fund manager. The following funds/ETFs are mentioned in the article:


Personally, I am surprised DBC and TIP are not on this list. I currently hold some DBC and TIP and am looking to buy more. Whenever TIP dips below 100/share, I consider buying more.

Update on July 2, 2009: following El-Erian's belief that commodities will steadily increase in value over time, I bought UNG, WPZ, USL, GSG, COP, and SLV. I don't see human populations declining, which means that more resources will be needed.

Natural gas, on the other hand, is a unique commodity that may experience dramatic price fluctuations. Unlike oil and gold, there's plenty of readily accessible natural gas, but if Americans shift from oil to gas, natural gas prices should slowly increase.

Update on July 7, 2009: I added to the July 2 positions except for USL and SLV and opened a small WMB position. What a wild ride this week has been for commodities. I am holding all of these shares in a retirement account to minimize taxes on any dividends/distributions.

Update on July 22, 2009: yesterday, I sold most of the holdings mentioned above--some of them increased 20% in less than a month. I am not a greedy man, and I am concerned that the market may decline when unemployment benefits start running out and CIT experiences liquidity issues again.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

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