Our entire portfolio management methodology is based on the believe that “the best offense is a good defense”, and that the best way to achieve return objectives over time is by mitigating large capital losses that come from “riding out” steep downturns in risk assets.
Precious metals have been an excellent store of value and are considered to be on the more defensive end of the commodity risk spectrum. They tend to outperform the broader commodity complex when real interest rates are low, or negative as they are today, since the opportunity cost of holding a non-yielding asset is minimal.
A disorderly unraveling of the crisis in Europe is still the greatest “known” threat to investors of all types. While a number of potential outcomes are possible, we do not believe a worst-cases scenario is the most likely. In our view, all European participants are in a slow creep towards the “Lose-Lose Win” scenario.
Walter Energy (ticker: WLT) is a pure play metallurgical coal producer with operations in the United States. The market for met coal has been very tight over the past several years due to constrained supply and increasing demand from emerging markets like China, India and Brazil.
InterDigital develops and patents wireless technologies that are fundamental to mobile devices and networks worldwide. This industry is growing rapidly as more end users upgrade to smart phones which consume more data and bandwidth, which plays perfectly into IDCC’s hand as they hold a number of key patents in the next generation LTE mobile network.
As we head into the New Year there are four factors on our “Macro Radar” that we believe will be the primary drivers of financial market performance in 2012, which means we will spend a lot of time proactively focusing our research efforts on understanding and monitoring their development throughout the year.
How do we define the tipping point? Well, there are three “legs to the stool” required to support the path of ever-increasing indebtedness. The tipping point is reached when one of these three legs is weakened to the point of breaking. In Europe’s case, it’s all three at once.