Climate change is one of the most important issues facing humanity for, oh, the next 10,000 years, but you never hear about it in the presidential debates. Moderators don’t bother asking. The best we got last night was undecided voter Kenneth Bone,hero to cardigan enthusiasts everywhere, asking Donald Trump and Hillary Clinton how their energy policies would stay “environmentally friendly.” (Neither candidate clarified.)
The RealReturnEnvironment (RRE) portfolio has been liquidated this past week as US benchmarks for the small, medium and S&P 500 reached record highs. Price earnings ratios are stretched and while it is always possible that further equity gains are available, there is a real risk that equities will hit a downdraft given the still pending political and debt issues in Europe and the slowing economic growth in Asia. Debt markets are also under stress as interest rates will no doubt begin to rise in the United States in the coming months so that capital values will suffer. As a result it is felt prudent for the RRE portfolio to go into 100% cash for the foreseeable future and this section will be suspended over this time frame.
Equity markets were down last week taking levels back to the mid December levels reflecting the weak earnings reports in the US and the problematic Greek election outturns. Apple was an exception with its great iPhone 6 sales, notably in China. The RealReturnEnvironment (RRE) portfolio was up 2.31% from the end of the year 2014 (see below).
The markets are very volatile with the pending European Central Bank decisions on quantitative easing against the backdrop of the unlinking of the Swiss Franc form the Euro and those major disruptions. Fortunately the RealReturnEnvironment (RRE) portfolio is not exposed to Europe and while it has fallen during the past week, the declines have been relatively modest as the RRE portfolio has only given up the previous week's 1% gains since December 31.The portfolio position so far in 2015 is now relatively unchanged. See below.
The RealReturnEnvironment (RRE) portfolio declined in the last week of 2014 so that the gain over the year to December 31, 2014 was 28%. This portfolio value will be utilized as the basis for the RRE gains and losses in 2015 (see below).
Real Return Environment is intended to serve the needs of students, researchers and investors by providing topical articles, country data, literature references and investment insights on topics such as primary energy use.
"Real Return Environment is intended to serve the needs of students, researchers and investors by providing topical articles, country data, literature references and investment insights on topics such as primary energy use."