2011 Goals

We always had time on our side
But now it's fading fast
Every second, every moment
We gotta, we gotta make it last
--OMD

Last year was a good one from a personal finance standpoint. Looking ahead, here's what I'd like to accomplish financially in 2011.

Build current assets. Previous generations used to carry enough cash to cover liabilities and present needs. Currently, most households operate in an illiquid state. They may be socking away lots of cash in retirement accounts but those funds are not readliy accessible for present day needs. As such, many households--even many 'high income' households, live paycheck to paycheck and struggle to make ends meet without borrowing.

Now that the mortgage is in the rear view mirror, I want to focus on building current assets--those readily available for present needs. In other words, I want to save. Yes, the income gets taxed on the way to the bank. But but once taxed, those funds are in my control--which provides some advantage over 401ks and IRAs. As current assets grow, so does freedom...

Trade opportunistically. With respect to current financial markets, I share John Hussman and Mr Practical's views that risk. As such, I currently can't be long stocks, or even commodities for that matter, for anything more than a trade. Despite gargantuan money printing programs of central banks, my sense is that risks of deflation outweigh inflationary risks in 2011--particularly after the way things unfolded last year.

This finds me entering 2011 with financial assets (i.e., securities rather than physical property) that are 90% in cash. The remainder is currently split between an equity index short position (5%) and longer term treasuries (5%) as I sense a decent chance of a downside move early in the year.

While there may be some decent values here and there in stocks, it's difficult for me to own them for the long term when my big picture views are bearish. Broad price declines generally take down the good with the bad, particularly when systemic leverage is high (like now).

I'm hopeful that some day valuations will come down to levels where buy and hold investing once more makes sense. Until then, I'll try to choke up on the risk bat and try to pick up a few sheckels along the way.

Add gold bullion. I'm not enamored with gold at these prices after the run we've had. However, I would like to add a bit more physical this year--perhaps 3-5% by weight. I'll likely pick up the pace if gold prices take a significant hit (which very well could happen).

Keep an eye on housing. This one is way out there, but I'm keeping my eye on the local real estate market just in case a 'dream house' comes on the market at a price that is irresistable. I'm certainly in no hurry to take on debt again, and my position will be much stronger if I'm able to sock away cash for a few years, but I want to keep an open mind to the possibilities here...

position in SH, TLT, gold