Tuesday, January 08, 2008

Investing Strategies for 2008

By the way I'm not an investment guru or anything like that. I am not involved in finance at all. This is just something DH and I cooked up over the weekend for our plans for 2008. We're going to bank on the US dollar dropping maybe 10%. And because of this we're going to have a heavy tilt into international stocks.

Also we think that a recession is coming. So we've dropped all retail stocks and are picking up instead energy and resource stocks. We hope to buy international resources. Also we plan on putting a nice chunk into emerging markets.

Also we're avoiding things like retail, healthcare/pharmaceuticals, and banking. The banking if it should drop more, and the books start to balance, we'll jump into Citibank is what we're thinking.

We're avoiding retail because we think people are going to be spending a lot less this year with the recession and salaries are not going to keep up with inflation. So people will be cutting discretionary spending. Although huge drops like 30-40% may induce us to buy some stocks.

Also we both feel Medicare Part D will be revamped by Congress. Expect Medicare to be able to negotiate with Pharmaceutical companies. This is a HUGE deal, this will cut pharmaceuticals companies profits. Right now the US is 2/3 of the income revenues of all drugs, and there is no regulation of price. Other countries negotiate price of drugs with these same companies. So sure Merck and Eli Lilly are coming out with blockbuster drugs, but the time of unlimited drug charges are coming to an end. Thus there is too much uncertainty to invest in.

But overall we're moving into a rather aggressive posture for our investments this year. We're looking at 40% international, 30% small cap, 10% emerging markets and 20% large cap US equities.

No bonds this year, I think I'm waiting to buy TIPS. Watch TIPS on May 1st. For everyone whose 40-50s. I'll explain what I'm waiting for TIPS, and why I'm waiting to buy some for my mom and myself.

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