Then I have four Also Rans. Water becomes a preoccupation of environmentalists. There are hundreds of millions of people in China and India without safe drinking water and I think that is going to be the focus of environmental attention. To 12, internet commerce comes into trouble. You are already seeing now with the Uber and the New York City taxi medallion holders. I think Airbnb and Uber and other internet commerce companies are going to be forced to pay the same taxes and have the same insurance if they are commercial competitors.
Number 13, probably the one I have the least conviction about. This is that Brazil becomes the favorite of the emerging market investors. That would require Dilma Rousseff to become more business-friendly and not much sign of that so far but I think it is a possibility, but again I’m all [inaudible]. And finally, Number 14, already a lot of attention being paid to this: Hillary decides not to run. She wants to be the first woman President but she doesn’t want to be the first woman candidate to run and lose. And she is worried that Jeb Bush is a formidable competitor because of his ability to appeal to the Hispanics. She is also worried that she is too conservative for some Liberals and they will stay away from the polls. Obama only won by three percentage points. So Hillary has a lot to worry about if she loses some of the Liberal and Hispanic votes. Again, an Also Ran, or one worth thinking about.
Okay now, turning to Page 4, this is my “Radical” Asset Allocation. It is asset allocation and not a trading template so I make changes in it generally once or no more than twice a year. I have made some changes here and still has 10% in Global large cap Multinationals. That stays the same. It has 10% in other US stocks that stays the same. I have taken my European position down 5% because I am worried that Europe is going to have more economic difficulties this year, in spite of the quantitative easing. Have taken my Emerging Markets percentage down 5%. So both of those are now 5% better than 10%.
I have got now 10% that I can invest elsewhere. I am going to put 5% of it in the Hedge Funds because I think the market is going to be less correlated this years and long/.short equity hedge funds are going to do better. I still have 10% in private equity, 10% in real estate, 5% in gold — I’m not giving up, 5% in natural resources and finally, I will use the other 5% to increase my non-conventional high yield to 20%. So, I do have a fixed income component but it is high yield mortgages, leverage loans, mezzanine financing.
I can tell you that there is no portfolio anywhere in the world — and I have looked at a lot of them — that looks like this. This portfolio is radical. It basically has a whole equity orientation. It is designed to give you some ideas to think about because there are very few portfolios that have this kind of emphasis in non-conventional bonds. Turning to Page 9, the investors are still pretty optimistic, not as optimistic as they were the first few days of the New Year have sobered them up somewhat. So I don’t expect the market to run away here but I do think over the course of the year, you will see a 15% return.
