2010 Strategy

Hi all,

I thought I would start off this blog with my strategy and how my portfolio is invested for 2010.

You will see from my investing approach that I am a contrarian investor, seeking value in beaten down and undervalued companies. I am a risk taker but do not take unnecessary risks, that would put at risk my balance sheet & investment Portfolio. I have been through 2 crashes, the dot com boom and bust and the credit crisis and have learnt not to put all your eggs in one basket.

So, going into 2010, I am positioned 43% cash&fixed income, 57% in the stock market. This is fairly aggressive positioning, as I believe stock markets will continue to rise in the 1st qtr of 2010. However, more than half of that 57% is in defensive shares and funds, with strong balance sheets and dividend income. I am slowly becoming more defensive the higher this market keeps going, as there is an increasing risk of a correction.

My strategy is to increase cash as a % of my portfolio through the 1st half of this year towards almost 50%. Partly for tax reasons but also because I feel that there will be a better opportunity to enter stocks lower in the 2nd half of the year.

However, although I am becoming more sceptical about how much further this bull run can go, there is still value in specific companies. This is a “stock pickers market”

I believe the 3 main areas of value in the stock market are

1. UK income shares, which incudes the likes of Vodafone, Glaxo, AstraZeneca, BP, National Grid etc. They have high dividend yields and strong balance sheets and unlikely to cut their dividends.

2. Financials - I disagree with holding only the strong banks and see a-lot of value in RBS and Lloyds. the potential reward is far greater, than the favourite HSBC. This is very high risk and therefore I advise you not to risk too much on of your portfolio in banks. I bought more RBS at 28p(Up 35%) and Lloyds at 50p(up 15%) on the 31st Dec 2008.

3. Commercial and residential property shares - These beaten down stocks, have not taken part in any of the bull run in the stock markets and are attractively priced in the short to medium term. I have recently bought British Land and Taylor Wimpey. I believe the UK property market faces huge headwinds but these 2 companies are still priced at near Oct 2008 levels, where we thought there would be a depression.

So there you go guys theres an small insight into my strategy for 2010. I will talk about individual shares, gold, resources, currencies, bonds, proprty and so on throughout the year.

Just ensure that you do not risk what you cannot afford to lose and stay diversified.

Good luck for 2010

"Rule No.1: Never lose money. Rule No.2: Never forget rule No.1"- Warren Buffett