Investors - Deer in the Headlights? (No article)

hank

I considered adding this opinion piece to the "buying/selling/pondering" thread. But I know many go there looking for specific recommendations and didn't want to dilute all the good suggestions there. Caught UBS Chairman Axel Weber interviewed on Bloomberg TV Monday morning. Wish I could link the video, but apparently its's not available online yet.

FWIW: Trying to reconcile record low VIX numbers (low trading volumes - previously discussed on this board) with polls showing high public anxiety over geopolitical tensions (like N. Korea and natural disasters), Weber suggested that people are pretty much (1) already holding a lot of cash and (2) essentially frozen in place re their investments. In other words, the geopolitical anxieties have folks so much on edge, they've collectively decided to do nothing.

I've commented before that my own trading among funds is at an unusually low level (in this case a good thing). One small trade last week - the only change since early May. Nominal cash (It's actually a bit higher when considering other parts of portfolio) sits around 19.5% It dwindled from the 20+ % I set it at in early May. That's more of a barometer than any stroke of investment genius here. However, if it continues to fall (as risk markets rise) I'll need to reset it back to 20%.

I'll see if I can at least find a bit of biographical information on Weber. It was an interesting interview.
Biographical re Axel Weber: http://www.4-traders.com/business-leaders/Axel-Weber-4783/biography/

2 related threads (from @Ted)

https://www.wsj.com/articles/could-some-vix-related-funds-go-poof-in-a-day-1504576860

https://www.nytimes.com/2017/08/28/business/dealbook/vix-trading.html?_r=0

jerry

Do nothing seems like a good strategy .I expect to buy more at 1800 and just make more money if the market goes up. HOw fully invested am I Well I was 95% invested at the beginning of 2015 and since then have put all distributions into a money market and or floating rate fund.Obviously I would have been better off putting non equities into BOnds but everyone was saying interest rates would go up so I believed them.

Mark

Not frozen at all Hank. I have a plan and I've been pretty much sticking to it. Geez, if I reacted every time some talking head said get in or get out or buy now or sell now the string on my yo-yo would have broken a long time ago.

Like Jerry I'm about 95% invested, collecting or reinvesting dividends when strategically appropriate and basically taking what Mr. Market gives me.

I'm not saying it's right or wrong only that it's right for me.

Junkster

Many could argue, and rightfully so I suspect, that we are in some broadening top formation. Numerous pundits have articulated brilliantly why investors should be raising cash - yet the market keeps making one new high after another. It's a baffling market ( aren't they always). I am not a believer in holding cash, especially in a bull market. And it's not just a stock bull but a bond bull in many areas of Bondland to - hence I hold no cash. Many of us including me are at a loss to explain this resilient market. All I can figure is the economy is a heck of a lot stronger than it appears and in many areas ala housing it's more than strong. Still, my fear is we wake up someday and the stock exchange is closed down because the Korean nukes are flying and destroying. And when the markets reopen there is some 25% downward adjustment. But as mentioned many times here it has never been my thinking or fears which has made me any money.

Ted

@MFO Members: It now appears that my projected year end close of 2,520 on the S&P 500, that I posted early this spring, will be surpassed. No question the market is going higher as much as 16%.
Regards,
Ted
5th Fifth Dimension: ,Up Up and Away,:

hank

Mark said:

Not frozen at all Hank. I have a plan and I've been pretty much sticking to it. Geez, if I reacted every time some talking head said get in or get out or buy now or sell now the string on my yo-yo would have broken a long time ago.

Glad you're not frozen Mark!

Guess I used excessive hyperbole trying to summarize Weber's comments. He sounded to me pretty level-headed. Far as I could tell, his firm isn't making any moves or suggesting anyone else do anything different. I think he's correct that, in general, money managers have moved to a higher cash position now than they might have been carrying a few years ago. Hard to document. Am mostly with T. Rowe. Most of their fund reports suggest their managers are exercising an extra dose of caution - lower than normal risk.

I didn't react to Weber either - except to share his thoughts here. You need to understand that some of us have really boring lives and actually find this kind of financial chatter of interest - even if we don't act on it. Come to think - It's kinda nice being retired and being able to enjoy coffee with Bloomberg blabbering in the background rather than being at work.

Agree 100% with sticking to whatever plan you have. And, if one's plan says to pay 0 attention to market valuation, geopolitical factors, age, risk tolerance or anything else - that's fine. Obviously, some do have plans that take into consideration some of those factors.
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Clarification: Retired for 20 years. Don't maintain a separate cash reserve, emergency fund, cash on the side, or X-years living expenses (as many here do). Everything's invested all the time. Might help explain why a 20% cash position could appear "whacky" to some.