Week 6 Portfolio Update – Running on the Spot

by Lsigurd on August 13, 2011

I’m on a road to nowhere…

Its kind of amazing that with all the volatility this week, my portfolio ended in about the same place it began.

I was up about 1% on the week, which I do not consider too bad. I am down about 1% since the portfolio inception on July 1st, which is not great but given that the TSX is down some 6% and the S&P is down 11% in that same period it is not too bad either.

I did, however, end up with quite a different portfolio composition than I began the week with. I sold out of Mercer, Home Federal Bank of Louisiana, Second Wave Petroleum, and Prophecy Coal, while I bought new positions in Argonaut Gold and OceanaGold, and added to my position in Coastal Energy.

I’m very happy with my buying of Coastal in particular. I have a large position in my practice portfolio I track here, but an even larger position (both percentage-wise and in the absolute sense) in my actual portfolios. I expect good things to come from them.

In general though, I am concerned.

I do not like what the market is doing. It is eroding confidence. The US is so intent on budget balancing that you have to wonder who is going to be the consumer of last resort. And I have the suspicion that we are edging closer to the moment when the Euro zone implodes.

On that last point, there was an excellent article (IMO) by Michael Lewis in Vanity Fair this month where he talked about Germany and its relationship with Europe. You don’t come away from it with an upbeat sense of how this is all going to play out.

More generally, what one has to remember is that the gold bugs argument is not without merit. They have history on their side. We are still in the midst of a 40 year experiment to determine whether or not a human society can operate with fiat currency. I don’t mean to sound like some crazed hard money fanatic, but its true. Maybe it works out but maybe it doesn’t.

To be honest, the gold bugs look more sane by the day.

Next week will likely see me increase my cash position further.