In a recent article I mentioned that I was taking profits at the 2790 level (basis the S&P 500 index). Based on today’s prices, the market is 1% higher. Was my desire to take profits on my Long positions premature? Is there a higher presence of risk here at loftier levels? What moves am I making now?
Even though the market is higher than the time in which I exited Longs, I don’t feel my moves to raise cash were premature. I am always aware and very conscious of risks and there are plenty at present. We may be up 1% over the past three weeks but there’s a likelihood of a 2-3% pullback. There’s also an upside risk for those holding a lot of cash like me. There’s risk that the trade war suddenly ends and the markets run up like a scalded dog! No matter the market levels there’s always an element of risk. A risk to the upside (rally, especially if you’re holding cash) or to the downside (@ the time you’re fully-invested in equities).
What moves an I making now? I’m buying Consumer Staples ETF’s. This is the sector that is undervalued and the place that I find to have the least risk, and I want to be partially invested in the event the market takes off. If we experience the pullback I’m anticipating then I’ll redeploy most of cash in broad-based ETF’s.
Should younpayboff your mortgage early or should you take advantage of low interest rates and invest your money? I’ll address these questions in an upcoming article and I’ll reveal what I’m doing in my own case which may surprise my readers!