The Master has been in oil and commodity stocks for the past 2 years. The run has been great, and over the long term (i.e. 7-10 years) there is likely more upside to be had. However about a month ago The Master lightened up on commodities and exited the oil stocks. They had gotten rather pricey, short term upside looked limited, and the likelihood of at least a short term pullback looked (and looks) strong.

The Master prefers gold and silver mining stocks to the GLD and SLV ETFs for investment (speculation) purposes. If the right ones are selected, a multiple of the move in the price of the metals can be had. Of course, selecting the wrong ones results in either dead money (if one is lucky) or disappeared money (if not). The ETFs are very liquid, but buying bullion and storing it in a bank–or a coffee can in the back yard–meets the ownership goal while also giving the option of physical possession should things deteriorate to the point where that might look like a good idea.

The Master has also had good results with timber REITS. RYN and TWTUF have both performed well, though the fall of the US$ has hurt TWTUF, whose costs are in Canadian dollars while sales are mostly in US$. Timber increases (i.e. grows) at a steady 5%-6% per year, and once the housing industry stabilizes, so should the business of its suppliers. Timber REITs also have a low Beta, making them a good diversification, and pay ~4% – 9% dividends.

The Master is very fond of dividends and interest, and holds several high dividend / interest paying investments. The market values of some are down, but the dividends have not been reduced, so they are still performing their role (income with upside potential) in the portfolio satisfactorily. The market values will recover, if the dividends don’t decrease, as other high income seeking investors bid up the price. Bond ladders can also work well for income, but their liquidity is not as good. At the moment, liquidity is a GOOD thing.

As for currencies, The Master has dabbled in bets against the US$, and has won some and lost some. Right now the ’sell the dollar’ side of the trade looks very crowded–might be time for a 2-4 month rally in the greenback soon. However, this down cycle in the dollar still has some years to run, though how much lower it will go is a debatable point.

Private equity stakes in startups are a bit risky for The Master’s taste, but they do have upside Black Swan possibilities. Bon Chance, enrico!