Longtime reader Riccardo left a comment that Merriman's Fund Advice model says to be 100% out of equities. Riccardo's email did not say if that means 100% cash but for now no stocks.
Is that the right thing to do? Is the horse already out of the barn? Do we have another 30% down from here? I don't have the answer to any of these questions. If today is the bottom then yes, the horse is already out. If it drops 30% from here, selling today looks brilliant.
I have detailed the timing of every trade done in the last six weeks on this site. I feel as though I have acted rationally but there is no way to know what comes next week or next month or next quarter. One comment said my sale this morning was amateur. It may turn out to be that but there is no way to know. The name I sold is lower since I executed it at the open but the first five hours makes the trade neither right nor wrong.
The important thing is if you devise an exit strategy you stick to it. My general plan was devised long before this down turn. I believe I have been faithful to it without being emotional. To the extent you read this site to look over my shoulder, know that I have as much uncertainty as anyone but I am sticking to what I said I would do and the trades made over the last six weeks have been decided with logic (even if it is flawed as some of you believe) and not emotion.
Wikinvest Wire
11 comments:
Roger - do you believe there is any truth that much of this is hedge fund liquidation to cover their volatility sells?
the thing that says yes is the move out of almost every asset class except bonds.
the thing that say no is that bonds have been a popular destination for carry trade money and are going up in price.
My hunchis that it matters and contributes to the decline but i do not think any possible failure can carry the same threat that LTCM had.
This is begining to smell like a prelude - a prelude to an inflection point leading to sharply lower levels. The point may or may not be percipitated by the ongoing downturn. An event - such as mid-east military event, a shutdown of the Russian market, a 10% plus fall in Bombay/Korea/Japan/Brazil, a significant rise in the level of bad loans in China, Saudi acknowledgement of peak oil etc. - could be the trigger for this.
Systematic increase in the percentage of cash in one's portofoilo's seems prudent.
Your take?
LDB,
I think I have been systematically raising cash so I hope that ends up being the right thing to do.
It is not clear to me that more EM pounding is the tipping point for more US selling.
I have to say that figuring out the why is not the first priority for me.
Everything you cited has to be a part of the equation thus far but I don't know how much.
here is link to
Merriman's "Fund Advice", Signals Page.
Merriman displays both their Equity and Bond system-signals :-
http://www.fundadvice.com/hotline.html
Current profile:
All Cash
best wishes
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p.s.
believe, that Nelson Freeburg, of "Formula Research", Memphis, did intensive analysis and refinemement of Merriman's systems some years back.
Nelson Freeburg is also a Director of John Hussman's investment advisors.
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Your sale was right. Controlling risk is more important and different than speculating on market moves.
The global economy is in for some hurt. US consumer spending drives much of the world economy. People are getting defensive with spending due to less disposible income (higher credit card and mortgage rates).
US corporations have seen their best quarters for a while. The bear cycle has begun. Not much to cheer about. I do believe that Russia will come back before most emerging markets.
Roger, I am not to sure what a sell signal is or what a buy signal is. Since I am pleased with my portfolio, mostly blue chip and income producing. I see no reason to sell. Since I am in the stock market for the very long term (even being 62)I see no reason to generate buying or selling costs
Bernie I am going to post an article to reply to your comment, thank you.
Garland I can;t say you are wrong. but I hope you are wrong (insert nervous smile).
S.A.N. thank you but...yes on controlling risk but judging a move after a day or even a week would make it tougher for me to remain unemotional. Further a few days from now everything could be higher.
Anyone notice that elephant sitting over there in the corner of the room - the housing market. If prices really start to slide due to speculator's and builder's dumping inventory, things might get even uglier.
OG
The negetivity and caution here and everywhere has me less worried about the market now.
I was nervous earlier this year when volatility was so low and complacency high. I sold a bit then.
I am starting to buy into weakness these days and looking forward to a summer rally.
Betting the farm? No - not that confident. I will still be 25% cash after buying this downturn.
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