My own investment bias is income producing assets. My focus is on two of the big 'dogs' of US banking: Citigroup and Bank of America.
After a hold off over the last 6 months (i bought a small quantity of Citi at US$40 earlier this year and have held
), i am now resuming buying + regaining exposure to BAC.
To compensate for extra volatility risk i am reducing leverage.
My risk: the capital invested in these stocks, i dont think it will be a wipe out, but am expecting volatility to be massive.
Upside potential over 10 years: 400%+ (before gearing)
Downside potential: unless these companies blow up (they are complex financials, i think they will still be around in 10 years, ie on a 10 year viewpoint, i think capital is safe). However volatility as expressed by share price will be huge.
Current position in the portfolio:
Citigroup 2% (have been topping up recently)
Bank of America 1% (recent purchase).
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this is working out very nicely so far for 2012. Pity about the small position relative to assets.