In checking the S&P 500 Index futures this morning, as I write, more red with much the same for Greater Europe and Greater Asia. Seems to be the market's response to a North Korean bomb testing event along with China's devaluation of its currency.
Hopefully, things will get better as we move through the day. Old_Skeet has not done any selling or buying at this point in time and is still with his plan to accrue all fund distributions to cash. If the S&P 500 Index gets to the 1920's range this is a mid range valuation that the Index was selling at back in September. Not going to try to catch a falling knife at this level as the trend still seems to be downward. Even at this level the Index is selling at a TTM P/E Ratio of around 21 and on forward estimates around 17, by my math. I think the spread is way too wide and I look for forward estimates to get revised downward which will raise the estimate's ratio number.
Remember, the FOMC is in a rising interest rate mode and this is a headwind against both corporate earnings and bond valuations plus it helps make for a strong dollar.
Comments
Tried to minimize damage. Most came out of income-type funds, including DODIX, RPSIX, DODLX. Still, it hurts a little. Actually added a bit to PRNEX which will probably get clobbered today. Depending how year develops we hope to take additional distributions later on - but not absolutely essential.
Yep - Many keep a large cash reserve for such situations. But I've never been so inclined - maybe because we're pretty conservatively positioned as is.
One of the reasons that I keep a large cash position is that it really sucks to be needing a little cash and having to sell securities in a down market to raise it. I found it best to have a cash accrual account where all dividends, capital gains and interest from the investment accounts get sent and then to disburse from the accrual account. I too, sent wife and myself a little spiff today from our cash accrual account to our checking accounts since we are both now retired and I do not like to see our checking accounts drawn below certain balances.
We are not yet of the age where we have to take RMD's from the IRA's ... but, we most likely will take a sum equal to the income the IRA's earned in 2015 which will be sent to our cash accrual account for dibursement as it is needed.
As you know from my previous post I keep as sizeable amount of cash as part of my portfolio's overall asset allocation. I hate to be short cash when it is most needed. Just ACH it out ... and, it is there the next day.
Not looking good over the past few weeks.