Eileen's picks

The challenges of a Trust Protector

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The Trustee and Trust Protector of a Bicycle Trust - or any other person responsible for overseeing the long term financial assets of several generations of a family while making decisions about the needs and well-being of some family members - is likely to find themselves from time to time in the same position I found myself in last week: busy with the needs of people in the family and not attending much to the gyrations of the stock market.

On returning to the fray, it was certainly disappointing to discover my ranking had plummeted from 117 to 1564, along with my early large purchases of BAM, RIO and AMX. On the other hand, a number of the limit orders I had placed - some of them at what had seemed at the time to be ridiculously low prices - triggered, so without paying personal attention I made some additional acquisitions that may help offset those losses as time goes on.

The purchase of IWP at its lowest price since mid-March is a perfect example. This ETF seeks investment results that correspond generally to the price and yield performance of the Russell Midcap Growth index, and it rounds out the core holdings of this portfolio. I especially like this ETF because it uses a representative sampling strategy in order to invest in those index companies with higher price-to-book ratios and higher forecasted growth.

Another limit purchase was DBV. I chose this as an alternative to a money market account for a portion of the portfolio allocated to "safe stuff". This ETF seeks to track the performance of the Deutsche Bank G10 Currency Future Harvest Index - Excess Return. The index is comprised of long futures positions on the three G10 currencies associated with the highest interest rates and short futures positions on the three currencies associated with the lowest interest rates. The G10 currency universe includes U.S. Dollars, Euros, Japanese Yen, Canadian Dollars, Swiss Francs, British Pounds, Australian Dollars, New Zealand Dollars, Norwegian Krone and Swedish Krona.

Next came additional purchases in the "commodities" portion of the asset allocation model:

I believe that water is going to be THE commodity of the future, one that wars are fought over. PHO tracks the Palisades Water Index, which represents the stock-market performance of companies in the global water industry and holds 38 stocks of companies ranging from giant to micro. The expense % is low, selecting individual "winners" in this field is next to impossible even for experts which I'm definitely not, the ETF pays a dividend, and I intend it to be a very long term holding. While I anticipated a lot of volatility in water stocks, the limit price I set was substantially down from recent highs. Unfortunately, it wasn't nearly as low as it's fallen this week. Another "if only I'd been more pessimistic" purchase....

I faired better with the limit price I set for IGE which tracks the S&P GSSI Natural Resources Index. I bought this because I want heavy exposure to energy going into hurricane season and because of present and, I believe, growing instability in oil-producing regions. Valero and Suncor were two energy stocks I was considering, but I decided I wanted more diversity. This ETF contains 127 stocks and has large stakes in both stocks I was considering.

The balance of my allocation to "commodities" should have triggered this morning but didn't: one of the many small mysteries of the Marketocracy system. DBC, the commodities index tracking fund I purchased some of and described in an earlier posting, dropped like a rock briefly this morning. The plunge drove the holding from the top of my stratification list to the bottom and the rock bottom price appeared on my open orders page, but no purchase was made and the order stayed open, just as it did with an additional purchase of DBV earlier in the week.