Wednesday, August 4, 2010

Investment Strategy

I am sharing my investment strategy. Please share yours.

My investment strategy -
A business cycle lasts 4-7 years. Go long on certain assets at beginning of the business cycle. After 3 years into the cycle, start selling those assets slowly and raise cash. As the fed raises interest rates, slowly buy government bonds. By buying bonds, you are just front-running the fed because fed will be buying it when the recession hits. Keep selling the assets and raising cash as the cycle matures.
Watch for credit contraction. Once you are sure that we are in credit contraction, go short with some money for extra points. But cover your shorts every 1-2 days.

When fed has done lowering rates, sell the bonds. Slowly, start buying certain assets.

Every business cycle is different. So, you may have to buy different assets in different business cycles. Also, you don't have to be exact in your timing. Just approximate.