From inception on May 8th, 2008 to December 31st, 2008, the Doppler Value Model Portfolio went from a balance of $100,000.00 to $98,926.18 for a loss of 1.1%. Although the Doppler Value Model Portfolio lost money, it overwhelmingly outperformed every major market index, such as the DJIA and S&P 500. The Japanese yen investment (FXY, CurrencyShares Japanese Yen Trust) did very well, and the Everbank Hong Kong Dollar CD outperformed cash (which isn’t saying much given pitifully low interest rates), but Berkshire Hathaway Class B (BRKB) and the Japanese stock investment (DFJ, WisdomTree Japan Small-Cap Dividend ETF) both took hits.
It’s only because I was having difficulty finding bargains and then too busy to look that I kept more than 60% of the portfolio in cash. The Doppler Value Model Portfolio didn’t miss my attention. If I had gotten around to deploying more of the cash, the portfolio would have taken a much bigger hit than a 1.1% loss.
Despite the possibility of further losses, I am determined to deploy most or all of the cash balance. Since the stock market has much lower valuations now than was the case when I first started this blog, I should be able to find bargains in the weeks and months ahead. Treasury Bill yields are microscopic. The combination of Helicopter Ben, trillions of dollars in bailouts added to the already enormous national debt, and the monetization of this debt (Fed printing money in order to buy the debt securities)
threatens to jump-start hyperinflation. In this Brave New World, US Treasury Bills are now a potential time bomb instead of a safe haven. While we all still need cash for everyday expenses, the proverbial “rainy day” (especially in this economy), and expenses coming up in the next few years, we cannot expect our cash to hold its value. When inflation does strike, Helicopter Ben will be slow to raise interest rates, which will quickly erode the value of cash and fuel even more inflation.
