Investment strategy update August

11,000 TSX and Dow almost at 10,000, who would have pictured this in March when we were hitting new lows everyday. Like Buffett said, be fearful when others are greedy, but greedy when others are fearful.

We made a nice run from the lows and optimism is returning. The real estate market is still incredibly strong (unheard of in a recession) in Toronto - up 6% year to date. Will this keep up with job losses unabating? we are close to 10% unemployment, plus most of the new jobs that are being created are service related. Credit card debt and delinquency is increasing. Bankruptcy rates are going up..... but recoveries are usually built on a wall of worry.

I agree that some confidence has returned to the market but until we see a return of value creation, we are not going to see a sustainable recovery. I look at Mfg as value creation. Investment banking, service industry, banking etc are NOT value creating industries - mfg, auto sector, high tech are and they have moved off-shore.

Govt's need to invest in Green technology and create value in new industries such as alternative energy.... I have not seen much of it yet. This will create wealth for the nation long term.

Back to my strategy, I am selling chunks of equity into the rally as the market moves up. Cash position is increasing every time the market moves up. Similarly on big down days or series of downs, I pick up a few that I like that have fallen disproportionately more and sell into the rally.

I also consolidated all my locked in accounts, RESP funds, RRSP (had little accounts everywhere at different institutions)... they are all in my TD Waterhouse account now. Centralized and under my full control.

Not sure if now is the time to short the market yet, but I believe that we are anticipating a recovery which will come, but the market has recovered too fast, too quickly while the fundamentals do not indicate long term sustainable changes that will create long term value.

As a result, it's moving into cash and leaving it there for opportunistic trades. one area that I am starting to get into is alternative energy - looking for solar Mfg and wind/hydro mfg and operating companies - if you know of good ones with good mgmt and business model (stand alone without grants), please let me know.