Rick, I Don't Wanna Touch The Iguana

The hottest meme in stock market circles this week is the Rick Santelli “Tea Party” video, the title of this post is a reference to an obscure SNL skit with Horatio Sanz and Amy Poehler. You can watch the Santelli video here. In it Rick concisely spelled out some of the big problems with the housing bailout and by extension (as I see it) the problems in the entire spending plan that is coming at us.

There are two hats that one can wear here. One is to be outraged by what is being rewarded and who is being rewarded (and I don’t disagree) the other hat to wear is to worry about your portfolio, to assess the investment implications of what this all means and then devising a strategy based on your assessment. Ideally the assessment and devising of a strategy would have begun months ago as this has been a slow moving train.

My job is to manage money for clients. To me that means giving assets a chance to grow when things are healthy and protecting assets when thing are unhealthy, as they are now. My job is not to solve the world’s problems. Having an opinion and expressing the opinion is fine and I have done some of that but that is not job one for me.

Candidly, and perhaps selfishly, if you manage your own money I think your job one is the same as mine; give your assets a chance to grow when things are healthy and protect assets when thing are unhealthy. Solving the world’s problems comes second.

Consistent with job one, the US market and economy are worse off than most other investment destinations. Parts of Europe and Japan might be worse off but that is still unfolding. Protecting assets may be the priority for quite a while longer. To my way of thinking this means more cash, more foreign exposure (including equities, bonds and currencies), a little bit of gold and some absolute return vehicles. None of this is new which speaks to the slow moving train comment above.

If you believe that the US is facing structural issues, and I do, then you have to look at other countries and if you do I think you will conclude that many other places are facing more cyclical issues which means they can start to comeback sooner. I have been saying this for months and it has started to happen. There will be headfakes in other markets and I believe there will be bear market rallies in the US but as selfish is it sounds I would tell you to worry about protecting your assets as the top priority before trying to solve the world’s problems.