Investment: Doing Nothing By Gareth Milliams

It seems contradictory, but there are times when to do nothing is to do something. Presently, nearly all of my lump sum portfolio clients have elected to hold at least 50% in cash are underweight bullion (GLD)and underweight UltraShort Russell 2000 (TWM) and UltraShort Basic Materials Index (SMN).

We are monitoring the power commodities such as long coal, uranium and oil. Oil is still interesting because of its converse relationship with the US$. As the dollar weakens, oil strengthens and thus a strong dollar (as we have now) can push the oil price down.

Coal is the basic material that we have so much of but that we know will fall out of favour due to its ability to destroy the planet when burned. However, it is a plentiful resource and only a fool would ignore it.

Uranium shares are oversold with most stocks having experienced 80% plus losses. But it is the cleanest and most cost efficient fuel. I have a feeling that during his first State of the Union that President Obama will make a positive announcement regarding nuclear energy. He knows that America needs clean, cheap fuel and that nuclear energy gives China, India and France a competitive edge. After his first year, he will be much more subject to political mores and so needs to spend his political capital early. I may be wrong, but if I am right, then the ETF, NUCL will be an absolute buy.

Oil is falling in value on a daily basis. From $147 it now trades (as of today) at $41.15. It may drop further to less than $30, but it will breach $100 again on the back of global demand, speculation and a crippled dollar.

But for the moment, these are just on my watchlist. They will be added to my portfolio at some point. I do believe that what fuels the economy can drive our profits.

At this point I choose to do nothing. I am happy with where we are and can see no reason to buy or to sell. But doing nothing is hard. I look to myself to maintain discipline.