By LM Lupo, CKO,

We started the new year in the same place as we finished the old year, in an ultra conservative, mostly cash T-Bill position, US Intermediate Treasury Bonds, and a few speculative stocks.  The portfolio below might look like the genius portfolio in just a few short months, but considering that Wall Street is the drunken stupor version of both memory and intellectual integrity, one should not grade us on the curve. 

The corn and Euro anomaly below are cash based positions and not a leveraged futures position, for good reasons detailed in a separate money management article.   Suffice it to say here, rarely is leverage needed in most markets, and even if it is, very, very few understand the dynamics of leverage on both portfolio returns and the human psyche.  It is a difficult thing to teach and experience is too costly a head master, but as we mentioned, we will try anyway in later articles

As readers know, we have been bullish the bond market for several months, and our fundamental and technical models continue to point to a softer economy and lower interest rates ahead.  See our earlier bond forecast here. 

Bond funds turned in a very mediocre performance when compared to equities in 2006, but we think that will change in 2007 and bonds should outperform stocks as a whole, particularly on a risk adjusted basis.  We have a bond fund buy rating note here.  Given the models perilous risk warnings in equities at this juncture, (see our index articles for more) the low maintenance, low risk portfolio allocation below makes the most sense.  We will update the portfolio as market conditions warrant.

As of  3.19.2007

	Date	Portfolio Percent	1.2.07 Price	Current 3.19.07	YTD 3 months	6 months	Trend
US 10 Year Bonds	1.2.07	50%	4.7	4.5	+1.5%	+3.6%
T-Bills	1.2.07	25%	4.9	4.95	+1.0%	+2.6%
Pacific Ethanol	1.2.07	5%	15.0	15.16	+1.0%	-9.7%
Sinovac	1.2.07	5%	2.50	3.10	+24.0%	+16.0.%
Corn	1.2.07	5%	3.90	4.00	+2.5%	+68.0%
Euro Cash Deposits	1.2.07	10%	1.305	1.336	+2.4%	+6.1%
TOTALS	1.2.07	100%			+2.6%	+6.1%
S&P 500	1.2.07		1414	1386	-2.0%	+3.5%

All positions are net long.

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