Monday, October 15, 2007

Thoughts on the Portfolio

Fairly strong sell-off today. The market seems a little jittery with bank earnings coming out. China National Offshore Oil (CEO) continues its torrid pace, as does China's overall market. It has more than doubled since I put it in the portfolio in May. Can China keep up its pace? I think it can, at least in the short term. They are growing rapidly, with an economy developing into a situation with more competition, less regulation, and a huge investing base of middle to upper class. They seem insistent on showing the world how much of a force they are next year in the Olympic games. I think their market is headed into stages of a bubble, but should be able to hold out until then.

Another portfolio holding that is quietly doing well is T. Rowe Price (TROW). I've always been impressed with their product, which is high quality, lower cost funds. They have a great history of returning cash to shareholders, and increasing earnings. They have introduced target retirement funds, which automatically change risk levels based on how close you are to retirement. Although as an investor, I'd rather choose my own means of diversification, these funds are a great choice for passive investors who don't have a lot of market knowledge. If we see weakness in the market over the next few months, this is one name worth buying.

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