April 9th: Ed’s Daily IRA Summary   8 comments

Another easy post:

OVERALL: +0.08%

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Posted April 9, 2014 by edmcgon in Open Thread, Portfolio

8 responses to “April 9th: Ed’s Daily IRA Summary

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  1. Ed – I have to admit I am confused. What is your strategy? Where do you think things are going and what sign are you waiting for? Every six months or so, I try to think where things will be during the next 12 months and I try to shape my portfolio (at the margins) around that view. To be entirely in cash just seems so extreme to me. If you are worried about a correction, wouldn’t you want to be in some gold or bonds? Bigger picture, what sectors do you think will outperform in next 12 months?

    I know I am generally worried about smaller cap stocks and plan to move a chunk of my portfolio over next month to larger cap (like CSCO, MSFT, BR, HPQ and COH).

    • Marshall,
      What historical precedent do we have for QE? The better question is what historical precedent do we have for tapering QE? Honestly, this is a “better safe than sorry” move on my part. If I see the economy starting to pick up, and I mean more than the weak signals we’ve had so far, then I can always buy in.

      I actually do have part of my 401k in a bond fund. I don’t report it here because it’s the 5% of my 401k that I have to maintain in Fidelity funds.

      As for gold, until it is no longer being manipulated by the TBTF banks, I am avoiding it.

      • Ed – we do not have a historical precedent for QE. I am just asking what your strategy is. Just to be super defensive is a strategy and that is fine. What would cause you to buy? A 10% correction? A 20% correction? Better economic data? I do not disagree the market is extended, so my strategy will be to move to about 30% cash and away from higher beta stocks. But I do not see a rush to do so. I am watching two signals, (1) the 50 day ema of the IWM versus the 200 day ema – when they are close to crossing will be a signal and (2) decision moose website moving to 100% cash or treasuries. But my goal is to try and avoid a massive sell off like we had in 2008. I am not trying to avoid these 5 or 10% speed bumps as that is not really risking my overall capital position.

      • Marshall,
        If I see some of the most overpriced stocks, such as AMZN or TSLA or NFLX, start to reach proper valuations, then I’d have to start looking to buy. On the other hand, if I start seeing “can’t resist” bargains, I will probably go ahead and start buying. The few bargains I do see now are such that I think they can go lower.

        Also, you’re right about the 50 and 200 day MA’s, since the death cross usually occurs close to the bottom. But I would view that as a confirmation signal, not a green light. We could get cheap enough without that ever happening.

  2. Marshall, after looking at the weekly and daily charts of the SPY, I don’t see anything to change my earlier comments. With the pop today, the SPY on the weekly chart is barely above last weeks close. Technicals on the weekly chart barely moved and one key indicator did not move at all. The daily are a little stronger but nothing to get excited about yet. What we need to see now is if there is any follow through over the next couple of days. If we get a big drop tomorrow or even a flat day, I don’t think the 50 day ma will hold.

    • Trader, With that said I’d say spxu could be a wise risk for a few days. Wave traders tend to agree with what I wrote below.

  3. Ok I’m taking some money off the table in my 401k. We broke 1842, we bounce to 1872 now we should fall to or just under 1800?

    Marshall, I have been meaning to say I do follow after you in my 401k. I keep saying I’m taking money off the table, well I’m only 20% cash. Now the hard part is putting that money back to work in July or after a 5 to 10% pull back.

  4. DIA: 1.24, 33.1K
    QQQ: .082, 615K
    SPY: 1.34, 1.48MIL
    IWM: 1.37, 347K

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