Over the years I have tried a number of different financial advisors but have never been particularly happy. In particular, I have found that most of them seemed to ignore long term trends that I believe in and seemed to basing asset allocation more on generic models. So relatively recently I have taken over asset allocation entirely myself. Here is the allocation that I am targeting with the rationale for each:
20% Internet — here I am largely long on big individual names such as eBay, Amazon and Google, but have started to add a few names from around the world, such as Yoku in China. As anyone reading this blog knows I think the Internet will change every aspect of the world and through what I do every day I have massive exposure to the startup end of the investing spectrum which is why I am focusing this on the large caps.
20% Climate Change + Robotics — at the moment I am really under-allocated here but I am trying to build to 20%. If anyone knows an ETF that targets climate change and doesn’t suck, I would love to know. Ideally, someone puts a model together that I can follow on Covestor (USV portfolio company). For now I have a couple of individual stocks, such as First Solar. Again this is a long term trend that readers of this blog know I believe in. As for robotics, I am just getting started looking at this area, so don’t have any exposure to date but that too seems to me another important trend.
20% Emerging and Frontier markets — I am doing this exclusively through ETFs and am long on China, India, Brazil and Russia. I am liking Russia less these days as Putin seems to be dialing the clock back on everything. So far I have nothing on Frontier Markets, but am pretty sure that I will be adding some ETFs here as well but need to do some more homework first on what I like. The basic theory here is that these economies have more headroom for growth than the US and Europe.
20% Gold, Commodities, Real Estate and Alternative — this is kind of a mixed bag but my overall view is that despite the absence of near term inflation we have created a bunch of ticking time bombs that could set off a fairly massive devaluation and I would hate to be caught unprepared for that. So this part of the portfolio is primarily a hedge than a growth strategy and I have been long gold for quite some time. For the growth oriented alternatives I am using models on Covestor.
20% Cash and Fixed income — I am most uncertain about this part. Returns on LendingClub (USV portfolio company) are great and I will add more money there. But the rest is mostly cash right now. The rationale is that I am nervous about a big downturn if Europe blows up and want to be able to have some buying power then. That kind of market timing has not worked all that well for me in the past but I feel too nervous about the macro environment to be fully invested.
I would love to hear from others how they are thinking about their asset allocation and also how they are implementing it. I should point out that almost all of what I am using to implement to can be bought by anyone with no minimums. Even Covestor has relatively small minimums depending on the model it can be as low as $10K.