Leuthold writes, "Negatives, such as a soaring inflation, renewed deficit fears, foreigh political strife, earthquakes, new problems in Euroland, rising oil prices, etc., have been mostly ignored." Why, he asks.
Simple: "The driving force here has been underinvested individual portfolios scrambling to move their equity exposure up to more or less normal levels. This got underway back in December 2010 when still cautious mega investors began to really believe the economy was on the mend, that a double dip was not in the cards."
Ever the contrarian, Leuthold, who is heavily quantitative, is reining in his equity exposure from an "aggressive 73% to 63%. "Currently [his limited partnership] equity portfolio is predominantly in non-U.S. stock markets." He also bought a 2.6% stake in physical uranium on the Toronto Stock Exchange on the grounds that "nuclear power will continue to be a vital source of energy." Leuthold cautions that even though he may take that stake up to 5%, "I view this uranium position as a very long term play." He is also buying aluminum, department stores and selling railroads, computer and officde hardware.