Today’s market reversal was a change in character we haven’t seen in quite some time. We opened with a sizable gap higher and very quickly saw selling come in and take over. While the frenzied action has had me on guard and more concerned of late, this morning’s early ramp seemed over the top and motivated us to do even more selling. Today’s sales takes our cash position north of 17% in our aggressive accounts, which can be prorated accordingly in our moderate and balanced allocations. While I do not condone market timing, there is no question that this euphoric start to the year has raised my red flags to the point of taking more of a defensive posture than we’ve had recently.
Corrections are normal, healthy, and very much needed. At this point, I don’t believe this correction will be any different; however, due to the steep angle from which we’re coming, a rapid drop that catches many off guard is definitely not out of the question.
My goal with this quick message is, not to have us micro-managing each tick, but rather to give you a short update to let you know that I too am watching things very carefully. I am becoming more cautious and have taken what I believe to be appropriate actions to protect a portion of the portfolio in the event of further declines.
The cash we have will eventually be put to work in the areas where we see opportunities present themselves; but, for now, we’ll just be patient and see how things play out. I hope you’re staying safe, if you’re caught in some of this snow, and enjoying a wonderful start to the New Year.
Until Next Time.