It’s been one heck of a year so far in the global stock (and bond!) markets. The market peaked at the end of January and it’s been in a downtrend with tremendous daily volatility. Is it time to be worried? If one is heavily allocated to equities and losing sleep, then maybe. Here’s last week”s stock performance:
DJIA 23,671.40 -4.93%
NASDAQ 7,049.91 -5.60%
Russell 2000 1,521.75 -4.03%
I’m personally only partially invested in equities as I’ve been extremely concerned of the risks since late last year, basing this caution on overall bullish sentiment and high valuations. I am now ready to make use of my heavy cash position and begin buying again. For one thing I am taking advantage of this Offer from Betterment . I opened my account yesterday, provided banking information and the transfer will take place on Monday. Within 100 days I’ll receive 30,000 bonus American Airlines miles. The allocation Betterment will be investing my cash: 79% equities/21% fixed income. I am more than comfortable with this allocation with stocks selling off and Betterment picking up bargain-priced index funds on my behalf. Another great offer available is from Personal Capital. Through the end of March their investment advisory is offering zero management fees for six months. Click on the link to personal capital net worth calculator on my sidebar under “home.”
In my taxable brokerage account I’ll also be buying SPY and MDY on any further weakness in the stock market (I’m hopeful the market gaps down on Monday!). On Friday I made an initial purchase of the following alternative mutual fund: BIVIX which is a long/short equity fund with a very capable portfolio manager, read about him here: Mutual Fund Observer Article. (By the way, this site is an excellent resource for mutual fund profiles, I encourage everyone to not only subscribe but also support the website….I am NOT an affiliate but an avid reader of this site and newsletter).
Before buying any stocks, ETF’s, mutual funds or call options (I plan to nibble on some index calls soon, this is NOT a recommendation, option trading is risky!), be sure and re-read my Recent blog posting on equity allocations and risk tolerance. Keep in mind, stocks go up long term and are definitely appropriate for long term investors. There are definitely risks in the short term and I may be early in my buying.. I admit that I have been a bit of a market timer over the past few months, having pared way back on equities in late 2017 (avoiding this correction for the most part) and now with plans to rebuy. I have a tendency to take profits when indices at all time highs coinciding, with bubbly sentiment and I’m a buyer when markets are selling off (especially at or near double bottoms) and many great stocks are cheap (consumer staples and REIT’s for instance). Do your own research and follow your instincts AND risk tolerance levels.
DISCLAIMER: I am not an investment advisor and this article is for informational purposes only, its not advice. Stock and options trading is risky and you can lose all of your capital. Trade and invest wisely.