Asset allocation for August

The Faber timing model has turned bullish on two more asset classes. In July commodities, as measured by the GSCI crossed above their 10-month moving average. So did REITS, as measured by the NAREIT US Total Return index.

Here are August's allocations:

• U.S. stocks: 20%
• International stocks (EAFE): 20%
• Commodities: 20%
• REITs: 20%
• Cash: 20%

Of the five asset classes, only Treasuries are still below their 10-month moving average. I am using the 10 Year Treasury Ryan Index for this asset class.

I should note here a source of cognitive dissonance for me. My two favorite analysts are now on opposite sides of the fence. Here is John Hussman in today's market comment:

Momentum-based, trend-following, simplistic thinkers with a speculative bent generally do very well during bubble periods (though not over the full cycle). Such analysts appear to have no reservation about jumping in here, because they assume that there will be no consequences to the overhang of deteriorating mortgage and commercial debt, even when coupled with “trigger events” such as rising unemployment (not to mention a median duration of unemployment that is far in excess of that of previous recessions).