By and large Fed comments under Ben have not been taken gently by the markets. I'm not sure why today would be different (this as a nagging concern not a prediction).
It looks like we could be on the verge of coming up to an important point for the market as a couple of things looks set to converge all at once. Also it looks like the 50 day will soon cross below the 200 day, unless something really big happens right away.
Something spectacular this afternoon could be the charm if it goes above these resistance points and can stay there for a few days.
I do not expect this to be the case but assessing the other side of your trade goes with the territory. In the rally (or whatever is the best way to describe it) that started yesterday afternoon I have lagged by a hair but have caught most of it.
In a time where demand for equities is in question (at a minimum this much is true) a small lag with extra cash built up is OK.
2 comments:
To be the devil's advocate on cash positions, one should be 100 percent invested. Diversity and re-allocation decisions are more important. I have supported your side of the equation but it was a moderately well known etf based manager (david vomound)who has argued otherwise. He claimed to have run multiple longterm outcome studies using different timing signals to go into cash and then back into equities. According to him, sticking to full exposure, only re-allocating among etfs (all broad based indices, no industry sectors) about once per month, produced far superior returns. As soon as you go from cash and then back into equities, it is invariably at a higher level from when one raised cash, and the equity entry then has a higher risk premium. These losses accumulate overtime and offset the occassional real bear mkts. I do find it interesting that Hulbert's top rated timers, not even them, regularly beat the mkt. Ultimately, tracking one's own decisions is the best way to establish objectivity and constructive feedback. Goodluck to all in this nervous mkt.
This is exactly the line of thinking I believe in when I say over and over here not to make big bets on one out come.
"Go to cash" as stated implies 100% cash. I can't count how many times on this site I have said not to go 100% anything.
I do beleive in more cash than normal at certain times as I have also written about many times including this post.
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