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Is It Time To Say "Thanks"

Monday, September 24, 2012 - 6:16 PM
For those with a somewhat balanced portfolio (a modicum of equities as well as fixed-income), one might suggest a full-throated "thank you very much" to this year's stock market run-up. When one considers the fragility of the World economies, anything over 10% year-to-date is truly amazing, and Mr Market is still well north of that. Recall, for example, last year, with major gyrations, only to end flat.

Is it time to say "thank you very much" and lighten up on equities? I would say (a full-throated) "Yes".

While this smacks of market-timing (which is true), it also smacks of reality. Stuff goes up, stuff goes down. It was not that long ago that Mr Market was in the absolute toilet (March, 2009, anyone?). How many of today's "perma-bulls" were so confident back then? And how many, secretly, said "if it ever gets back to where it was, I'm bailing."

Well, it's back, and are you bailing? The answer, regrettably, is "no." Greed seems to trump wisdom.

I, for one, am taking this opportunity to sell equities into a relatively strong market. I might miss the top, but I guaranty you I won't sell at the bottom. As weak as a 2% yield appears on fixed-income these days, it's a whole lot better than having green fade to red in equities. And don't get me started on bond funds. Thanks to Ken, those 2% CDs are out there.

Just my $.02
7
BozoBozo137 posts since
Feb 14, 2011
Rep Points: 937
1. Monday, September 24, 2012 - 6:46 PM
I wasn't expecting the 2008/2009 bear market so soon after the 2001/2002 bear market. It does seem like we could be heading into yet another bear market.
1
Ken TuminKen Tumin5,469 posts since
Nov 29, 2009
Rep Points: 125,077
2. Monday, September 24, 2012 - 7:00 PM
Bozo, wise advice. It's always best to sell when everyone else is buying and vice versa. The easy part of investing is buying; the much more difficult skill is knowing when to sell. Very few investors have mastered this side of the transaction.
2
loulou544 posts since
Aug 3, 2010
Rep Points: 3,397
3. Monday, September 24, 2012 - 7:32 PM
Fed (and the President) wants to keep the stock market up for the year (at least before the election).  Is that the reason the stock market is up?  I have no idea.

But I do know not to time the market.  The contrarian apporach is good to know, but hard to practice, too.

I have learned to keep a very conservative portfolio and not to sell/buy drastically.   

 
1
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426
4. Monday, September 24, 2012 - 7:51 PM
51hh, buy and hold is a sensible policy for younger investors in the accumulation stage, not so good for retired folks. Of course, if you have a diversified portfolio with risk on and risk off assets, and have structured the portfolio to withstand black swan events (2008-09), then a buy and hold strategy could work.
2
loulou544 posts since
Aug 3, 2010
Rep Points: 3,397
5. Monday, September 24, 2012 - 9:00 PM
Lou,

Thanks for your suggestion/reminder.  No, I am not into buy/hold strategy, either.  I have a tactical strategy called "buy high/sell low", which seems to be an adaptive "timing" strategy.  But actually it is based on objective trigger with no human emotion or prediction.  This strategy preserved my porfolio in serious downturns such as the one in 2008. 

Since I am pretty lazy on implementing such a strategy lately (the market has been a boring up a few days and down a few days), it becomes a buy/hold strategy by definition. 
1
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426
6. Monday, September 24, 2012 - 9:40 PM
Although am in retirement, I nonetheless will still go in when everyone is heading for the exits, clutching Mylanta in one hand, and a shopping list of well-researched selections in the other.  While I may miss the very bottom, the intent is to get high quality stocks at my target price (or something close to it), while not straying too far from my allocation.  Also prefer to buy and hold, selling rarely and only as necessary to either a) rebalance and bring the portfolio in line with my overall allocation of equities and cash or b) take profits periodically or c) weed out non-performers or those with poor ongoing prospects.  

IMO, it is very important to make no sudden moves, as 51hh has mentioned.
2
pearlbrownpearlbrown1,438 posts since
Nov 2, 2010
Rep Points: 6,270
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