Wow, what a difference a week makes...
|
| Jan 24, 2011 | today | % Change |
| My Portfolio | $99,994.75 | $100,177 | 0.60% |
| S and P 500 | 1282 | 1255 | -2.11% |
| FTSE 100 | 5943 | 5598 | -5.81% |
| Commodities Index (GSG) | 33.99 | 35.29 | 3.82% |
| 20 Year Treasury (TLT) | 92.43 | 94.31 | 2.03% |
| US Dollar Index | 78.30 | 76.76 | -1.97% |
On the 4th we were up over 5% and now, barely breaking even. Still outpacing just about every index but the Treasuries and Commodities.
Don't panic. Remember back when I started this blog and I said that the stock markets were due for a pullback, well sometimes it takes a major natural disaster to spark a major sell off. This may just very well provide the patient ones an entry point. Stick to the plan and stick to the process to make decisions. Only time will tell if this is just a normal (albeit, painful) pullback in a larger bull market, or if this is the beginning of a systematic changing of market momentum. When I know more, you'll know more. For now, it's far too soon to tell.
Personally I believe that we have some major, major systematic problems in our midst and this country could be due a rude awakening in the not too distant future. These problems, however, will probably not be uncovered by an earthquake and nuclear meltdown in Japan.
The worst of all possible outcomes for the US is would be if our dollar is devalued so much that the USD is no longer the reserve currency and countries begin to deal directly with one another in their own currencies. If this happens, 2008 will look like Disney Land. That would be the beginning of the end of the lifestyle we have been accustomed to. Inflation would hit immediately, 10-15% inflation on every commodity. $8 gas, bread lines, hoarding, riots in the streets... It would be bad... Depression Era bad....
But thankfully, there are enough Rosie the Riveters in the US for that to ever happen, right? For now, I will just stick to my methods of investing and resist the temptation to start buying Silver Bullion and Canadian Maple Gold Coins and storing them in my sock drawer.
According to the numbers, we are still quite far from a systematic reversal in relative strength. In fact, when "The Portfolio" was originally constructed back in January, we were a long way from a systematic reversal then. I would use about 8% retraction from your original purchase price as a "Sell it All" point. Don't let anything get much beyond that because that is usually a good indicator that things are bad and will probably get worse before they get better. If an individual holding is down that much, I'll sell it. Otherwise, let the traders have their fun and possibly use this downturn to rebalance or buy more. If you want to get a little "Hedgy" check out the DOG... or any of those inverse ETF's for a short time hold. it could "stop the bleeding" if you have a bad gut feeling about the latest market action.
If any of the other problems start showing up, I'll let you know....
Till then, go play some golf and get out of the house and let March do its thing to the markets....
happy investing!!
