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Old_Skeet holdings in cash equals about 25% of my asset allocation accorning to Morningstar's Instant Xray. I started raising my allocation to cash a few years ago as I felt stocks were becoming to expensive to keep buying more of them. With this I stopped reinvesting my mutual fund distributions and accrued them in the cash area of my portfolio. I have now reached a full alloction to cash (25%) and above my target of 20%. Now that the S&P 500 Index has entered correction territory and reported earnings (according to S&P) have started to pick up I have started to review my portfolio searching for some equity funds that might need to be rounded up within their respective sleeves. This past Friday, I spent a little cash (less than one percent) and I increased my position in DEQAX raising its percentage within its sleeve weighting to about 15% with a target weighting of 20%. So, I will need to buy again to achieve the weighting balance I am seeking. Currently, CWGIX has a weighting of 60%, EADIX has a weighting of 25% and DEQAX has a weighting of 15%. Looking to be about 55%, 25% & 20% respectively if S&P 500 earnings materailize as anticipated. I am thinking they will.
And, if earnings keep floundering and disapoint and the markets continue to pullback then I have ample cash to help cushion the fall and put some cash to work when I feel market conditions warrant. Some might say this is market timming (perhaps so, perhaps not); but, I think it is just being prudent and investing inside the confines of my established portfolio's overall asset allocation. And, when I become cash heavy, its time to rebalance ... and, I plan to be prudent as to how and when I do this.
But, when was the last time the market wasn't troubled? I'm trying to recall the last time the market and economy seemed perfectly normal? Is this problem caused by age-related memory loss, or do such periods fail to exist?
Near 0% interest rates would indicate that the Fed has viewed the economy as troubled at least since 2008 when the government found it necessary to step in and prop-up money market funds.
And before that there was "WIN" (Whip Inflation Now), the energy crisis of the '70s and '80s, the emergence of OPEC, Black Monday of '87 (23% drop in the Dow), Greenspan's "irrational exuberance", the tech-bubble/bust of the late 90s, the drawn-out impeachment of a President, a disputed national election ending up before the Supreme Court and the horrific 9-11 attacks that closed Wall Street for days and temporarily derailed the economy.
How many of us avoided market timing in 2007-8 and did not capitulate eventually?
Capitulation is the classicial way to sell low and lock in the paper loss. For those who stand pat and ride it all the way back in 2009 and more in the following years. Market will go up and down. Key here is to stick to an asset allocation that is within your risk tolerance (BobC pointed this out on his past posts).
2016 did not started well but things will settle down as always. Don't think we are coming close to the situation of 2007.
he's asking a question. how many of us, in 07-08, did not capitulate eventually? i for one know that i did -- not entirely but enough to make me feel real stupid when the turnaround came. will i do the same thing next time? hope not but probably. the thing of it is, when you're down 40%, being down 60% doesn't seem that unlikely.
Comments
And, if earnings keep floundering and disapoint and the markets continue to pullback then I have ample cash to help cushion the fall and put some cash to work when I feel market conditions warrant. Some might say this is market timming (perhaps so, perhaps not); but, I think it is just being prudent and investing inside the confines of my established portfolio's overall asset allocation. And, when I become cash heavy, its time to rebalance ... and, I plan to be prudent as to how and when I do this.
But, when was the last time the market wasn't troubled? I'm trying to recall the last time the market and economy seemed perfectly normal? Is this problem caused by age-related memory loss, or do such periods fail to exist?
Near 0% interest rates would indicate that the Fed has viewed the economy as troubled at least since 2008 when the government found it necessary to step in and prop-up money market funds.
And before that there was "WIN" (Whip Inflation Now), the energy crisis of the '70s and '80s, the emergence of OPEC, Black Monday of '87 (23% drop in the Dow), Greenspan's "irrational exuberance", the tech-bubble/bust of the late 90s, the drawn-out impeachment of a President, a disputed national election ending up before the Supreme Court and the horrific 9-11 attacks that closed Wall Street for days and temporarily derailed the economy.
Talk about troubles.
2016 did not started well but things will settle down as always. Don't think we are coming close to the situation of 2007.