Everyone loves making gains while markets rise, and we always hope that the good times will continue, even though we know deep down that markets simply don’t work that way. Right now, we have a clear dichotomy between the investment positioning of Institutional Managers (with Fiduciary Duty), and the recommendations of retail advisors.
Many big-money managers with Fiduciary Duty to their clients are taking their portfolio risk down by selling to those late-comers who are kicking themselves for not having bought during the previous panics. The buy and hold crowd including most mutual fund sales people are singing the same tune as always. Remember, mutual fund sales people only get paid their trailer fee if they keep you invested (no conflict of interest there, eh?)
As with every aspect of your life, you should make your decisions based upon your own priorities, not upon what others think is “the right thing to do.” In these silly markets, be Mindful of Your Priorities.
In this context, here’s the critical question: Is it more important for you to try and squeeze a few more percent of possible gains from equity markets, or is it more important for you to focus now on preserving your capital from the emerging risk?
When asked the above question near market highs, prudent tactical investors answer in exactly the opposite way that the majority do. “The Masses are always wrong at the extremes, but help create the trend in between.”
While the mainstream financial press is yammering on about whether or not the Federal Reserve will actually follow through on its recent musings about “tapering” its $85 billion of monthly market stimulus, here are some things to consider:
- Europe’s currency, stocks and peripheral bond markets are showing signs of FINALLY falling apart,
- Precious Metals are failing to rally with any strength and thereby foreshadowing more declines,
- Q2 Earnings Estimates are being significantly downgraded globally, and
- For 19 specific reasons to be concerned about the Global Economy, Click Here: http://www.zerohedge.com/news/2013-07-05/19-reasons-be-deeply-concerned-about-global-economy
Meanwhile, stocks are already priced for perfection. Over the next couple months, does this strike you as a time to stay in, or get your capital to safety?
In these silly markets, be mindful of your priorities, and follow through with a specific plan that matches them. If your advisor tries to impose their agenda over your priorities, just remember whose money it is.
Patience and Discipline are accretive to your wealth, health and happiness; Fear and Greed are destructive.