Weekend reading: Summer rally edition

I am almost fully invested, so you might think I’d be glad to see the Dow over 9,000 and the FTSE tickling the 4,600 mark again.

Certainly it’s a relief after 18 months of seeing my net worth evaporate week by week.

I’ve written many times on Monevator that bear markets don’t last forever, but even I have to pinch myself when I find myself materially richer at the end of the day.

Yet I’m frustrated, too. I’ve only a strategic reserve of around 15% in cash after buying throughout the market slump – and that cash may be needed for a new Macbook or even a house deposit as much as for a cheap share.

I remain convinced that this is an amazing time to put your money in the stock market on a ten-year view. I’ve written before about the excellent stock market returns we may see after this lousy decade.

Normally you have to hold your nose when you buy because of equity valuations. For the past six months, you’ve instead had to close your eyes and ears to bad news headlines.

Over the long term, the valuations you invest at will make much more difference than long-forgotten scare stories and volatility, in my view.

The end-of-the-world threat was really over by November 2008, and certainly by January 2009. March 2009 was likely the buying opportunity of a lifetime.

Don’t get me wrong – there are no guarantees. Shares could yet fall again or stagnate for years. But history and valuations suggest an upswing is more likely. Hence my frustration at not having more free cash available.

The recession is really hurting my income. I came back from my recently holiday to discover I’d lost another long-term client. (This is the reason for the rather erratic posting schedule on Monevator recently).

As long as I can avoid eating into my capital I’m not too worried, but I’d far rather be diverting excess cash into knocked down shares.

I’d bet than in a few years we’ll get a lot less for our money. Perhaps even in a few months. I’ve tilted my portfolio somewhat aggressively to try to outperform, but around half of my money remains in stock market index trackers.

I think government bonds are poor value and corporate bonds will suffer from inflation without offering the government security, but I quite like commercial property, which has edged up only a little since I bought.

This week’s money blog post round-up

• David Ning, the author of the MoneyNing blog that I tied up with for a blog post series on bear markets earlier this year, has written The Little Budget Travel Book. Mike from Oblivious Investor thinks it’s great.

• Elsewhere, Oblivious Investor quite rightly takes on those who think a home is not an investment. (I’m paying at least twice in rent what friends who bought in the mid-1990s are paying on their mortgage, and they’re going to end up with a capital sum. That, my friends, is the power of investing. See my money mistakes post from yesterday).

• Moolanomy considers the best response to stock market volatility. (My argument would be dollar cost averaging solves most problems, most cheaply).

• Frugal Dad continues to blog about going off-grid, this time with kids. (I hope not off the electricity and Internet grid?)

• Wealth Pilgrim explores early retirement packages.

• The Digerati Life looks into creative ways to find work. (I may need to follow some of these tips to get new clients soon!)

• Lazy Man and Money suggests California legalizes pot to get out of its budget woes.

• The revamped Mint Blog is like your new best money magazine. Check out this pretty map showing how major currencies have swung about during the recession.

A few mainly UK-focused articles from the big boys

• The Bank of China is offering cheap mortgages in the UK, says the Financial Times.

• Also in the FT, Merryn is banging the drum for soft commodities again.

• The Independent now hides its investment coverage under ‘spend and save’ instead of ‘invest and save’. How is that for a contrarian signal? Anyway, Mark Dampier looks at China.

• Famous income fund manager Neil Woodford snorts at the economic recovery, but still thinks some stocks are good value in this Telegraph article.

• The Times reviews how various alternative assets have performed in the downturn.

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