The Silk Road to Riches
How Silk Works
The Silk Portfolio has been constructed around the view that domestic economic demand and investment are driving Asia’s economic ascent.The Portfolio should be viewed as a whole rather than an assortment of stocks. It’s my hard-earned assumption that investors seldom follow such advice, so I also offer some direction in an effort to assist with the decision-making process in the Fresh Money Buys.
In this section, I rank countries and sectors so readers will have a guide at all times. The ranking changes often, so pay attention.The ranking starts with the countries I prefer and then lists specific sectors you should look into. When I mention a sector, it’s assumed that the first pick will be from the Long-Term Holdings. Then, if more exposure is warranted, additional picks will be from the Alternative Holdings.
Of course, if a country isn’t represented in the Long-Term Holdings, refer to the Alternative Holdings for a selection (which is the case for Macau).
Portfolio recommendations should be taken at face value. For instance, if a stock is recommended as a buy and trades below the price indicated in the portfolios, the recommendation stands for newcomers as well as longer-term readers.
Occasionally, I recommend that long-term readers take profits off the table by booking any gains while letting the initial capital invested. The same is implied when a country or a sector is moved down in the Fresh Money Buys.
In other words, I expect investors to look at their profits (i.e., how much money they’ve made above the initial investment) and then calculate how many shares they needed to sell in order to take those profits off the table.
If you’re not a long-term reader, chances are you probably don’t have profits to take from the specific stock; you’re unaffected by the recommendation. The fact that I haven’t advised selling the stock outright indicates that it remains a good, long-term holding.
Silk has one main portfolio, the Long-Term Holdings, and an alternative, the Alternative Holdings-Permanent Hedges. Look first to the Long-Term Holdings for asset allocation in the markets covered here.
In the Alternative Holdings-Permanent Hedges Portfolio, readers can track permanent hedges and shorter-term recommendations. It also includes companies I’ve recommended for longer-term or more fundamental reasons, and they represent additional exposure to favored investment themes. For example, Lukoil (Russia: LKOH, OTC: LUKOY) provides extra exposure to a favored theme: Russia and energy.
On the left-hand side of the Web site’s main page, under Portfolio Performance, you can get a snapshot of the Portfolio’s return compared to other major indexes.
On the Portfolio page, you can click on the asterisk next to each holding to review the original commentary and recommendation. I plan to enhance the portfolios with extra features and welcome comments and suggestions.
Many new readers have also asked, “What do we do when the market drops substantially?”
Since Silk’s inception, I’ve been skillful and lucky enough to have booked profits before precipitous falls, in which case I recommended sitting still through the turmoil. I’ll also get word to you via Flash Alert if events turn too quickly.
Silkis built around a set of core themes. I often revisit those themes or certain analyses through a link to a previous article or by reproducing relevant paragraphs. You can also read previous issues in the Archives to gain an understanding of the investment philosophy of the publication.
Or you can ignore my advice and try to find the next big hitter the Portfolio will produce. You may succeed, but be aware that I don’t play that game; “fast guns” are wasting their time with this publication, as well as Asia and the rest of the international markets as an asset class.