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If you're thinking of taking profits... Sept 13th was a good chance to do it.
Why? You just had another QE with the market at all-time highs (which even I'm impressed with - open-ended QE with the market at all time highs; I thought QE was obviously coming, but it was going to take a market decline to bring it and it wouldn't happen until after the very political election season.) The propping up of the market is going to continue. I'd say those who are on the sidelines sitting in cash may want to have their money in something rather quickly to protect themselves from inflation.
Reply to @Old_Joe: "The propping up of the market is going to continue until it doesn't."
So, what you would be appear to be saying is that yet another bubble is being created. That said, how do you think this period of propping up ends - in an inflationary or deflationary manner?
Yes on bubbles. Inflationary... down the road. Not suggesting to get out of everything- merely to skim some off the top and wait to see. Don't believe that there is a whole lot of legitimate upside left- that seems to leave... downside.
Even with taking some profit in March and April we still have managed ~10% this year, with roughly 50% of the volatility of the S&P. We're in our 70's. That's plenty good enough for me for one year.
Hey I'd rather right size my portfolio in an updraft rather than a downdraft.
Form my thoughts, the market (S&P 500 Index) is getting pricey. By my math it closed today with a trailing price to earnings ratio of 16.2. I'll scale back equities in the near term should the Index reach 1500 and then agian around 1585. That would be trailing P/E ratios of about 16.7 and 17.6 respectively.
In addition, the Index is at a new 52 week high ... and, for it to keep climbing it will need more fuel (earnings and revenue). Otherwise we are looking at P/E Ratio expansion where investors are willing to pay more ... and more ... for a dollars worth of earnings. Some force is propelling this market ... perhaps so they can short it later. In addition, this upward movement could be from shorts covering.
Reply to @Old_Joe: If we look far enough, say 5 years time frame, US will enter another recession. Forward-looking picture is challenging... My take is that the interest rate will be higher than the near zero rate today, and investment grade bonds will be impact badly. As for equities they cannot continue to deliver the historical return with earnings declining. Overall investors need to adjust their expectation with respect to the goals.
Reply to @Old_Joe: If you're short, you're covering (or at least I'd guess it would be a decent idea for most who are) because I doubt many will want to short into open-ended money printing. I'd guess a fair amount of the move is short covering.
The short covering looks to be cooling off into the afternoon. I think my question remains whether or not retail will start coming in after this or use it as another excuse to sell more equity funds and buy more fixed income funds. If the latter, than I think everyone can stop wondering when those who left the market will come back because they're not going to anytime soon.
I am adding moderately to DWEIX (which was a small position but I think will become a more mid-sized one) but otherwise am just looking and researching and the usual.
1. If I had a frog in my pocket, I'd say "we", and the frog would probably do better investing than I do. 2. The recession is much closer than 5 yr. 3. Since my Tweedy Brown unhedged, doubled the gain of the hedged TB today, it must mean something, but I'm no economist. 4. Catch's link on the 13th led to Asian sources predicting inflows there for the near future, so does that make SFGIX a buy, or am I buying into a bubble? I'm not a timer (certainly not a good one), but I think Foster might have coattails to ride. 5. How long should one wait to fight the Fed? S&P 1500 is about 2% away.
In fighting the fed … I don’t think that is wise. Although I do feel one should right size their portfolio (keep things in balance) as equities continue to march upward I believe they become more risky as their P/E Ratios increase. Since, I feel we are in a maturing bull market I look more towards trailing earnings than I do forward earnings. In addition, I feel one should also consider the outlook for corporate revenue growth. After all, if sales and revenue can not grow … Where does that leave an investor?
This has been my family’s rule of thumb for many years … When stocks are approaching new 52 week highs, make a harvest and sell some down and book profit(s). And, when equities are towards a 52 week low, make some new plantings for the future harvest. Simply stated, I feel it is harvest time for domestic equities. However, I think there is still some value to be found in the international spectrum.
On the S&P 500 price target of 1500 … If one were overweight equities within their portfolio with respect to their asset allocation model I see no reason why not to rebalance back to a predetermined mark. For me my equity range is 40 to 60 percent and with the recent run equities have had … I am considering of trimming my equities back to about 45% of my portfolio when the Index reaches the 1500 range. Currently with their recent run upward, I now bubble at about 52% equity.
Everyone has to do what they feel is right for themselves from my thoughts. I post what I am doing for information purposes only … and, it is not to be construed as investment advice for others to follow. One should seek that form a qualified investment representative, which I am now at odds with mine.
You may recall from reading another post I made, I am odds with my brokerage house as to how much cash one should hold. They recently contacted me about deploying some of my cash which is currently around 20% of my portfolio as by their model I was holding too much cash. They feel I should be holding no more than 10% cash in an investment account. Perhaps, my broker might be in need of some sales ... and, he was targeting accounts with high cash balances in hope of generating some sales activity.
We will see what they have to say when the S&P 500 Index reaches 1500 and I call and put in some sell orders. I can make the portfolio bubble at 10% cash by removing the excess if they force the issue. That will mean they will be loosing about 15% of the assets within this account … and, I think their goal is to build assets … not have them leave.
I’ll keep the board posted on how this all comes out … but, indeed I feel something is brewing. As others have said and have done in the past I can simply vote with my feet and leave. I have been with this brokerage house since the mid 1980’s. I don’t intend to bash any firm about their policies … and, if they don’t have the flexibility to accommodate an investor of my type any longer … Well, I guess it will be good bye and hello to another investment firm. Some at my church and in my local investment exchange group use Scott Trade; and, they are telling me they have had no issues from them about their high cash balances. In addition, with them I can make trades online and with my old house I can’t. Perhaps, I’ll split my business.
Now you know what I am up to with my equity positioning and my investment account concerning its high cash percentage balance issue.
Reply to @Skeeter: Etrade is excellent for research and reasonably good in terms of fund selection. Reasonable TF fees and 90 day holding period for NTF. However, their customer service is mixed at best and irritating at worst. Ameritrade has (in my experience) tremendously helpful CS, but $49.99 TF and holding period of 180 days, except on Rydex/Profunds (which are NTF/no limit on trading/no min) and generally good selection of funds.
ETrade does have a very good select of commission free ETFs, as well.
All of this getting calls if your cash is X% or if you venture out of X model is new to me, and I've never heard that, nor could I deal with it.
You noted: "I’ll keep the board posted on how this all comes out … but, indeed I feel something is brewing. As others have said and have done in the past I can simply vote with my feet and leave. I have been with this brokerage house since the mid 1980’s. I don’t intend to bash any firm about their policies … and, if they don’t have the flexibility to accommodate an investor of my type any longer … Well, I guess it will be good bye and hello to another investment firm. Some at my church and in my local investment exchange group use Scott Trade; and, they are telling me they have had no issues from them about their high cash balances. In addition, with them I can make trades online and with my old house I can’t. Perhaps, I’ll split my business.
Now you know what I am up to with my equity positioning and my investment account concerning its high cash percentage balance issue."
>>>>> As I believe you understand my demeanor and that I am an even tempered person, I feel you are being pushed around by the broker, which I will presume is a full retail broker. As I noted previous, you have a plan and a method. To heck with them. How did their customers fair during the market melt? Did they get their customers to safety before Oct of 2008? I seriously doubt this. If you feel comfortable with this broker, then you should stay in place. If the comfort level is solely based upon the long relationship; they you must decide if this is still of any value.
Is this firm or broker a direct advisor to you? Have you a legal contract with them that spells out their relationship in decision making that supercedes your own choices?
It is 2012, and you should be able to perform your own choices and "online", too.
What if your cash was in a short term bond fund? Would your broker consider this as fully invested? What if you had "run" to all cash in September, 2008? Would the broker have denied this?
Your most key word for me in your statement is, split. As in the split meaning from our youth days..........as in, to leave or go. "I think, I'll just split."
I would query about Scottrade here. I recall CathyG or others noting some problems with account setup for reinvesting dividends or such.
Anyway, my vote would be Fidelity first, with a look at Schwab, too. I am not too familiar with Schwab online, but Fidelity has a wonderful user interface. Old_Joe would surely share his knowledge about Schwab.
Let me continue to say why I favor Scott Trade. With Scott Trade I can send buy and sell orders online … and, if the need arises I can meet face-to-face with an advisor as they maintain an office close to my home. Much like another national firm with offices in most neighborhoods but they don’t offer on line trading.
In following another one of the lessons I learned from my late father. Read the eyes. My father built his business with his customers based upon principals, values and good character. He realized he could not be everything to everybody so he sought out only the best to deal with and those that shared his style of business conduct … and, his company paid him well for the business transactions he made in their behalf.
Dad would drop a customer he felt, and their actions indicated, that they were moving away from the foundations of good business. However, he did have a mode to deal with them and that was what he called a FOB. Simply stated, if they did not have the cash at time of delivery … the goods were to be fetched back to the warehouse. Some call this a preferred cash customer and some call it a COD account. Dad called it a FOB. “First Order of Business” … Know how you are going to get paid. And, if you even “think” that you will not be paid … Simply pass on the deal as it took the profits of many good deals to cover the loss form one bad deal.
So I most likely, if I don’t hear the words I seek when I put these anticipated sell orders in … I will remove enough cash to where my portfolio bubbles to their model. In other words … Fetch the Overage Back home. Perhaps, it’s not the firm … It might be the broker and from my thinking he needs to be taken to school. I am there because the firm earned my family’s business in prior years … But, to keep my business going forward they will have to continue to earn it. I sure do miss my late father’s old broker that retired about five, or so, years ago. I feel he would not be calling me to buy at the 52 week high. But, he sure would be calling when it was time to plant new seeds.
So, with this, some may put money to work in the market at 52 week highs … But, not me. Wanting me to do that, to me, insults my intelligence and changes, from my perspective, the foundation of business conduct.
For my momentum portfolio, I am staying with the trend, slowly switching from HDV to IJR, but keeping a close eye. You can make money even if it is a bubble as long as you have a strategy to size your positions and exit when the trend changes.
Thanks for making a comment following my rant. I agree some value can be found ... but, let's say the upside is maybe five more percent. Do you want to put money to work now just to perhaps watch it pull back ten. From my thoughts, not me. But, there again I am within my equity range within my portfolio and thinking of trimming if the market keeps advancing.
If I were going to make a special investment at this time it would be a sector play in communication services. From my research, I am finding the sector as a whole is at about a ten percent discount. The other sectors that I found discounts in were energy and materials and those discounts are now gone ... but, at least, I got some money positioned before the discount disapated.
As of last check my large caps and global equity positions were leading my small cap positions so perhaps IJR, the Russell 2000, has some room to build momentum and run. Intertesing you brought this up as I had just reviewed my small-mid cap holdings which make up about 30% of my equities.
Hi all. It's been a while since I posted, but thought I'd jump in on the take profits idea. Don't have a clue where this trend is going, but as Old Joe said we ain't going to get a two minute whistle when it blows. I gonna stay in but with tight trailing stops and try to trade some of the more volatile stuff within IRAs. Don't have anything I love so much I can't buy it back later, lower. The 40 percent that's in taxable accounts is mostly B&H, and tell ya what it's going out of street name and into direct registration. Tells ya how much I trust anybody, huh. Hey, good luck everybody, and please be real careful out there! Best, hawk
If either one of you could figure out a good date in the future to take profits I would be very "indebted" to you...actually, I'd be "out-of-debted" due to you.
Good advice OJ. Lightened up a tad in the Roth today, moving a bit out of a balanced fund and into a diversified income type. Roth has done exceedingly well past 3 - 4 years & figure why look a gift horse in the face? FWIW
Reply to @Skeeter: The transition to IJR from HDV did not work out well. Thankfully, I was doing in steps and started reversing it (moving to cash) couple of weeks back when IJR went below 50 day MA. Net loss to the momentum portfolio was about 2.5%. Currently about 50% cash and rest in bonds (EMB and BOND).
Reply to @Ted: Respectfully disagree with your characterization. I gather that the poster (OJ) is well north of the 70 year mark. At some point - depending on one's health, other assets, other income streams, etc. - capital preservation becomes paramount. The extreme cash weighting isn't what I'd recommend for the vast majority who frequent the board. However, not knowing all relevant details, I'd be loath to characterize the allocation harshly. Also, many count their emergency cash reserve as part of invested proceeds - which may skew the overall allocation in favor of cash. Also, many invested in RPHYX (as I think OJ is) count that as part of their "cash" position. The suggestion by OJ was on the heels of a Fed pronouncement that immediately jolted equities higher. I'd agree such occasions are opportune for those already considering selling. (FYI - OJ indicated some time ago he'd be traveling and not in a position to access Internet for several months.) Regards, hank
I am still with my above stated position that being towards the low end of my equity allocation as I have been lightening up in equities and raising cash for sometime now. Based upon my tolerance for risk my equity allocation normally should range form a low of 40% to high of 60%. As of my last Instant Xray report my portfolio bubbled at about 45% equity.
If corporate America is cash heavy … Seems to me that that is a good reason for the small retail investor like myself to also be cash heavy.
Hey there are a lot of what ifs floating around as we approach the Presidential election, a decline in corporate earnings, the U S fiscal cliff issue and don’t forget the mess that abounds in Europe.
Something one might wish to think on. For me, caution is indeed warranted.
In addition, for those that read all of my post under this topic ... I reduced my cash holding within my portfolio at my current brokerage firm. This now eliminates the cash heavy position that I was carring, that concerned them, within my portfolio form the way it bubbled at the brokerage house. I now have this cash parked at my local bank. I also got a letter from the brokerage asking about the reason for the large cash withdrawal; but, I have not yet responded. And, most likely want.
Comments
I think we'll end the year flat or a few % up - dows ~ 13670
So, what you would be appear to be saying is that yet another bubble is being created. That said, how do you think this period of propping up ends - in an inflationary or deflationary manner?
Even with taking some profit in March and April we still have managed ~10% this year, with roughly 50% of the volatility of the S&P. We're in our 70's. That's plenty good enough for me for one year.
Hey I'd rather right size my portfolio in an updraft rather than a downdraft.
Form my thoughts, the market (S&P 500 Index) is getting pricey. By my math it closed today with a trailing price to earnings ratio of 16.2. I'll scale back equities in the near term should the Index reach 1500 and then agian around 1585. That would be trailing P/E ratios of about 16.7 and 17.6 respectively.
In addition, the Index is at a new 52 week high ... and, for it to keep climbing it will need more fuel (earnings and revenue). Otherwise we are looking at P/E Ratio expansion where investors are willing to pay more ... and more ... for a dollars worth of earnings. Some force is propelling this market ... perhaps so they can short it later. In addition, this upward movement could be from shorts covering.
Something to think on ...
Skeeter
The short covering looks to be cooling off into the afternoon. I think my question remains whether or not retail will start coming in after this or use it as another excuse to sell more equity funds and buy more fixed income funds. If the latter, than I think everyone can stop wondering when those who left the market will come back because they're not going to anytime soon.
I am adding moderately to DWEIX (which was a small position but I think will become a more mid-sized one) but otherwise am just looking and researching and the usual.
2. The recession is much closer than 5 yr.
3. Since my Tweedy Brown unhedged, doubled the gain of the hedged TB today, it must mean something, but I'm no economist.
4. Catch's link on the 13th led to Asian sources predicting inflows there for the near future, so does that make SFGIX a buy, or am I buying into a bubble? I'm not a timer (certainly not a good one), but I think Foster might have coattails to ride.
5. How long should one wait to fight the Fed? S&P 1500 is about 2% away.
In fighting the fed … I don’t think that is wise. Although I do feel one should right size their portfolio (keep things in balance) as equities continue to march upward I believe they become more risky as their P/E Ratios increase. Since, I feel we are in a maturing bull market I look more towards trailing earnings than I do forward earnings. In addition, I feel one should also consider the outlook for corporate revenue growth. After all, if sales and revenue can not grow … Where does that leave an investor?
This has been my family’s rule of thumb for many years … When stocks are approaching new 52 week highs, make a harvest and sell some down and book profit(s). And, when equities are towards a 52 week low, make some new plantings for the future harvest. Simply stated, I feel it is harvest time for domestic equities. However, I think there is still some value to be found in the international spectrum.
On the S&P 500 price target of 1500 … If one were overweight equities within their portfolio with respect to their asset allocation model I see no reason why not to rebalance back to a predetermined mark. For me my equity range is 40 to 60 percent and with the recent run equities have had … I am considering of trimming my equities back to about 45% of my portfolio when the Index reaches the 1500 range. Currently with their recent run upward, I now bubble at about 52% equity.
Everyone has to do what they feel is right for themselves from my thoughts. I post what I am doing for information purposes only … and, it is not to be construed as investment advice for others to follow. One should seek that form a qualified investment representative, which I am now at odds with mine.
You may recall from reading another post I made, I am odds with my brokerage house as to how much cash one should hold. They recently contacted me about deploying some of my cash which is currently around 20% of my portfolio as by their model I was holding too much cash. They feel I should be holding no more than 10% cash in an investment account. Perhaps, my broker might be in need of some sales ... and, he was targeting accounts with high cash balances in hope of generating some sales activity.
We will see what they have to say when the S&P 500 Index reaches 1500 and I call and put in some sell orders. I can make the portfolio bubble at 10% cash by removing the excess if they force the issue. That will mean they will be loosing about 15% of the assets within this account … and, I think their goal is to build assets … not have them leave.
I’ll keep the board posted on how this all comes out … but, indeed I feel something is brewing. As others have said and have done in the past I can simply vote with my feet and leave. I have been with this brokerage house since the mid 1980’s. I don’t intend to bash any firm about their policies … and, if they don’t have the flexibility to accommodate an investor of my type any longer … Well, I guess it will be good bye and hello to another investment firm. Some at my church and in my local investment exchange group use Scott Trade; and, they are telling me they have had no issues from them about their high cash balances. In addition, with them I can make trades online and with my old house I can’t. Perhaps, I’ll split my business.
Now you know what I am up to with my equity positioning and my investment account concerning its high cash percentage balance issue.
I wish all “Good Investing.”
Skeeter
ETrade does have a very good select of commission free ETFs, as well.
All of this getting calls if your cash is X% or if you venture out of X model is new to me, and I've never heard that, nor could I deal with it.
You noted: "I’ll keep the board posted on how this all comes out … but, indeed I feel something is brewing. As others have said and have done in the past I can simply vote with my feet and leave. I have been with this brokerage house since the mid 1980’s. I don’t intend to bash any firm about their policies … and, if they don’t have the flexibility to accommodate an investor of my type any longer … Well, I guess it will be good bye and hello to another investment firm. Some at my church and in my local investment exchange group use Scott Trade; and, they are telling me they have had no issues from them about their high cash balances. In addition, with them I can make trades online and with my old house I can’t. Perhaps, I’ll split my business.
Now you know what I am up to with my equity positioning and my investment account concerning its high cash percentage balance issue."
>>>>> As I believe you understand my demeanor and that I am an even tempered person, I feel you are being pushed around by the broker, which I will presume is a full retail broker. As I noted previous, you have a plan and a method. To heck with them.
How did their customers fair during the market melt? Did they get their customers to safety before Oct of 2008? I seriously doubt this.
If you feel comfortable with this broker, then you should stay in place. If the comfort level is solely based upon the long relationship; they you must decide if this is still of any value.
Is this firm or broker a direct advisor to you? Have you a legal contract with them that spells out their relationship in decision making that supercedes your own choices?
It is 2012, and you should be able to perform your own choices and "online", too.
What if your cash was in a short term bond fund? Would your broker consider this as fully invested? What if you had "run" to all cash in September, 2008? Would the broker have denied this?
Your most key word for me in your statement is, split. As in the split meaning from our youth days..........as in, to leave or go. "I think, I'll just split."
I would query about Scottrade here. I recall CathyG or others noting some problems with account setup for reinvesting dividends or such.
Anyway, my vote would be Fidelity first, with a look at Schwab, too. I am not too familiar with Schwab online, but Fidelity has a wonderful user interface. Old_Joe would surely share his knowledge about Schwab.
Lastly, you are the customer.
Respectfully and Sincerely,
Catch
Thanks for your comments. I’ll consider them.
Let me continue to say why I favor Scott Trade. With Scott Trade I can send buy and sell orders online … and, if the need arises I can meet face-to-face with an advisor as they maintain an office close to my home. Much like another national firm with offices in most neighborhoods but they don’t offer on line trading.
In following another one of the lessons I learned from my late father. Read the eyes. My father built his business with his customers based upon principals, values and good character. He realized he could not be everything to everybody so he sought out only the best to deal with and those that shared his style of business conduct … and, his company paid him well for the business transactions he made in their behalf.
Dad would drop a customer he felt, and their actions indicated, that they were moving away from the foundations of good business. However, he did have a mode to deal with them and that was what he called a FOB. Simply stated, if they did not have the cash at time of delivery … the goods were to be fetched back to the warehouse. Some call this a preferred cash customer and some call it a COD account. Dad called it a FOB. “First Order of Business” … Know how you are going to get paid. And, if you even “think” that you will not be paid … Simply pass on the deal as it took the profits of many good deals to cover the loss form one bad deal.
So I most likely, if I don’t hear the words I seek when I put these anticipated sell orders in … I will remove enough cash to where my portfolio bubbles to their model. In other words … Fetch the Overage Back home. Perhaps, it’s not the firm … It might be the broker and from my thinking he needs to be taken to school. I am there because the firm earned my family’s business in prior years … But, to keep my business going forward they will have to continue to earn it. I sure do miss my late father’s old broker that retired about five, or so, years ago. I feel he would not be calling me to buy at the 52 week high. But, he sure would be calling when it was time to plant new seeds.
So, with this, some may put money to work in the market at 52 week highs … But, not me. Wanting me to do that, to me, insults my intelligence and changes, from my perspective, the foundation of business conduct.
I am as my nick name suggest …
Skeeter
Thanks for making a comment following my rant. I agree some value can be found ... but, let's say the upside is maybe five more percent. Do you want to put money to work now just to perhaps watch it pull back ten. From my thoughts, not me. But, there again I am within my equity range within my portfolio and thinking of trimming if the market keeps advancing.
If I were going to make a special investment at this time it would be a sector play in communication services. From my research, I am finding the sector as a whole is at about a ten percent discount. The other sectors that I found discounts in were energy and materials and those discounts are now gone ... but, at least, I got some money positioned before the discount disapated.
As of last check my large caps and global equity positions were leading my small cap positions so perhaps IJR, the Russell 2000, has some room to build momentum and run.
Intertesing you brought this up as I had just reviewed my small-mid cap holdings which make up about 30% of my equities.
Please let us know how this works out for you.
Best regards,
Skeeter
Take care- OJ
If either one of you could figure out a good date in the future to take profits I would be very "indebted" to you...actually, I'd be "out-of-debted" due to you.
Keep me posted.
The transition to IJR from HDV did not work out well. Thankfully, I was doing in steps and started reversing it (moving to cash) couple of weeks back when IJR went below 50 day MA. Net loss to the momentum portfolio was about 2.5%. Currently about 50% cash and rest in bonds (EMB and BOND).
P.S. 51% Cash, how much interest are you getting ?
I am still with my above stated position that being towards the low end of my equity allocation as I have been lightening up in equities and raising cash for sometime now. Based upon my tolerance for risk my equity allocation normally should range form a low of 40% to high of 60%. As of my last Instant Xray report my portfolio bubbled at about 45% equity.
If corporate America is cash heavy … Seems to me that that is a good reason for the small retail investor like myself to also be cash heavy.
Hey there are a lot of what ifs floating around as we approach the Presidential election, a decline in corporate earnings, the U S fiscal cliff issue and don’t forget the mess that abounds in Europe.
Something one might wish to think on. For me, caution is indeed warranted.
In addition, for those that read all of my post under this topic ... I reduced my cash holding within my portfolio at my current brokerage firm. This now eliminates the cash heavy position that I was carring, that concerned them, within my portfolio form the way it bubbled at the brokerage house. I now have this cash parked at my local bank. I also got a letter from the brokerage asking about the reason for the large cash withdrawal; but, I have not yet responded. And, most likely want.
Good Investing,
Skeeter