Although it may not feel like the market is only down half a percent for the year. No doubt the last few days have been ugly and may get uglier.
It is times like right now that I have been writing about so often. Panicked selling of many stocks right here is probably a bad idea. A plan for selling, getting defensive, protecting assets, whatever you want to call it has to be made when your are not emotionally taxed and then followed when you are emotionally taxed.
I write about not being emotional with managing your portfolio but that is difficult for most folks. My telling you "I'm not worked up so you shouldn't be either" may not be helpful. Knowing you devised a strategy and all you have to do is stick with it might be more helpful.
For more un-helpful input, I would add that the market goes down sometimes. At the nadir of the spring sell off the S&P 500 bottomed at about 1220, it closed today at 1242.
In trying to ferret out what is really going on I would suggest a 30,000-foot view. I have been writing about concerns I have had for a while that may or may not be playing out now or may yet play out in the future. None of the catalysts that have been concerning me (and that I have been writing about) require any keen insight. The logic either made/makes sense to you or it doesn't. The idea is that sometimes a sniff test does the trick.
Just because the sniff test gives a bad result does not mean anyone one should make a HUGE bet like 100% cash or 100% short or something else. We are down a little. Six months ago, as you thought about the new year how would you want to have been positioned in the face of down a little? Are you positioned that way now?
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14 comments:
What do you mean don't be emotional! Take a step back and look at how far this mkt could fall. Just go back to the low in 2004. On the s&p that would be 1060 (vs today of 1242). The sprint with fast money in all sectors was over in 2003. I would not find it acceptable, particularly in a nontaxable account, to not raise cash whenever risk becomes more evident. And, this is why I do do-it-myself. Once in the thick of a crisis, like now, I have to agree with Roger. It is late in the game and change may only add risk. The tougher decision will be whether or not to sell and raise some cash into a reflex bounce. The Israeli mkt gave us a hint a few days ago. If you live there, yes, the sky can fall. A little fear is a good thing. It tells us to take action.
I think you miss a big point here. I write ad-nausiem about exit strategies and taking some off the table.
I advocate doing so without emotion.
Reducing exposure prudently yes, market induced panic no.
I take it the commenter may ne new to the site.
The post is a reminder to stick to whatever exit strategy was devised during calmer times. During calmer times I wrote about the need for a simple exit strategy for times like now.
I don't think 100% short is a bad idea. Infact 200% short is even better. What would make anyone think these markets will push any higher than the 11700 Dow high we have made. If anyone has studied the markets over the last 100+ years it can be observed that there there have been long periods of secular bear and bull markets. We have had a secular bull between 1982 and 2000. Its likely that we are currently in a secular bear which means each cyclical bull will have a lower high than the previous bull and lower lows. I would not be surprised to see the Dow in the 7,000's in six months. I don't see the Dow crossing 12,000 till the next decade. We are also in a secular commodity bull market and bull markets for commodities usually mean death to equities. People right now are hoping and praying for a quick bottom and than full steam ahead as far as equities are concerned. I don't like going with the majority. Hope and prayer unfortunately does not work in the markets. IMO the markets will go a LOT lower than most people can imagine.
Are you 200% short?
Sure hope he's not too heavily leveraged if he is doubled down; the market appears oversold and a reflex bounce is a definite possibility.
and the need for him to game that correctly is much greater than most other people.
We're at a three year trend line, unbroken in the course of this bull run. Roger. Do you have a line in the sand whereupon you would be reducing exposure or are you satisfied with your current model portfolio to ride it all out? The only positive spark that comes to mind would be better earnings. What happens if that fails amidst such a negative oriented mkt? I think 5% lower is next support. Knock on wood, i'm 70% money mkt and thanks to reading your blog i made sure that the remainder 30% had a decent yield. It will be scary going back into the equity mkt since it would be ashame to wait until it comes back to current levels.
I'm not sure if this is the same person I am going back and forth with but I have been chronicling every traded starting with selling in strength in April, selling into weakness in June and everything in between.
There have been dozens of posts that address this exact question, there is no way to condense that into a couple of sentences.
All I can say if that I have not sat idly by nor do I expect that I would in the future. I have raised a fair bit of cash and may raise more in an effort to sidestep a big chunk of down a lot. The move so far beit from Jan 1 or from the peak is still in the realm of down a little.
Do you go outside Rodger? How is the real estate market looking in Arizona? Is that part of your sniff test cause its smellin' mighty bad outside?
Massive debt.
Massive Hidden Inflation
War
Election Coming Up
I agree Roger. Pull out now and save yourself!
to last two comments, i have been concerned about those points for many months. A 7% decline from the top is nothing to panic about.
If you have read this blog for anylengh of time you know I have been urging defense for a long time.
"Do you go outside Roger? How is the real estate market looking in Arizona? Is that part of your sniff test cause its smellin' mighty bad outside?"
If you mean the residential market, it has already peaked and we have a glut of inventory. Prices, however, have not retreated. If you mean raw land, many deals are falling out of escrow. If you mean commercial real estate, it is hot and booming.
I love it when people are this scared..
Close to the time to BUY/
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