On market timing and other philosophy.
About 10 days ago (July 8th) nearly everyone was worried the world was coming to an end. Greece, the euro, the EU, and Europe were going to crash, and the Chinese markets were in a tailspin, and everyone was spinning how that would mean disaster for US companies doing business in China. There was a lot of talk about raising your cash levels in preparation for the coming Bear Market, or at least a correction, and a lot of talk about how long it’s been since the last correction, and how old the Bull is. I was at +31.5% for the year. I stayed fully invested (cash level close to zero, slightly negative actually).
Now, 10 days later, all those things are (temporarily at least) in the rear-view mirror, and I am at +40.6% for the year.
Eventually they will be right. There will be a major correction. There always is. And they will tell you loudly that they were right all along. And that they called it. But anyone who has sat on 40% cash waiting for the correction that never came will have missed a lot, a LOT, of weeks like this, while hopefully we’ll be able to absorb a 10% correction and hardly notice it. Just sayin…
Another subject: While my portfolio is up 40.6% for the year (and the S&P is up 3.3%), plenty of stocks I’ve exited are up for the year too, and some are up from when I exited them (some are down too). But so what? I can’t be in them all. My portfolio is up 40% when the Index is up 3%. Should I really berate myself because some stocks I got out of have done well? Really? I can’t be in all the good stocks in the market. It doesn’t matter what the stocks I sell (or don’t buy) do. The only thing that matters is what the stocks that I’m in do!
Best to you all