This is hard to believe. The Traders and I were just talking about the probability/possibility of a selloff this morning over coffee. I made the case that this isn’t a bubble. (I still don’t think it’s a bubble). Then we started the day and the market fell like a rock. Kudos to Rich, who no doubt made money in a couple of his SPY credit spreads.
Today was a terrible day in the markets (unless you were heavy in cash). I watched the market all day trying to make up my mind whether I wanted to lighten up in my big S&P holding. In the end, after checking out the treasury yields and the inversion that was happening, I did decide to lighten up. I was at about 13% cash. I increased my percentage to about 27%. Here’s what I’m thinking…
The market will most likely rally a bit off this dip, which is why I waited to make up my mind. With that said, I do believe that ultimately over the next couple of years, the long a market in which prices are RISING (encourages buying) we’ve been in will come to an end. All bull markets come to an end and real, actual bear markets make way for a new bull move. This current long term move is pretty old.
All the commentary says there’s probably still some fuel in the tank, even after the yield-curve inversion. I think this is true. Therefore, I didn’t sell everything; I just started to lighten up. I said a quick prayer for wisdom in all of this and I clicked the button. My fear is always that I didn’t sell enough and the market is going to go straight down from here, but I’m pretty sure that voice is one I should ignore so that my selling is more level-headed. I could be wrong and today could have just been a panic, but there are fundamental reasons for a downturn, should one happen. Right now I don’t see crazy high bubble-style valuations or really bad signs of some apocalypse to come, but Treasuries being accumulated for the shorter run is cause for concern.
A couple of thoughts…
I do hold some JPMorgan, which I will sell upon a rebound. It’s going to be harder and harder for the banks to be profitable in a recession driven by a yield curve inversion. I don’t own gold, but I would expect it to be solid in this fear-style market, especially with the Fed deciding not to raise rates.
Looking over the rest of my holdings, there’s not much I want to sell right now. I always have an issue with this when downturns are on the horizon. I have some great dividend payers that I don’t want to let go. However, if you’re going to have cash available for the big dips you have to create that cash position before the dip. So, I’ll be looking over everything trying to decide what makes sense for portfolio rebalancing.
Anyway… blessings to all.
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