The market is back near that record high again.
The worries and troubles of April are all behind us now… right?
Who knows?
Your editor certainly doesn’t.
We profess no claim to a proverbial crystal ball.
Instead, we prefer to rely on good old-fashioned common sense… something seemingly in short supply these days.
So here’s what common sense suggests investors should do today…
Sell Some, Not All
As we’ve mentioned previously, we’re not in the camp of folks who fear a big crash is coming.
Not yet, anyway.
However, we do believe the market’s best days are behind us.
Could the market go up from here? Sure it could. But do we see another 20%, 30%, or 50% gain?
No.
In fact, here’s how we see the rest of this year and 2025 playing out.
Like it or not, elections do matter. Not necessarily in terms of whether a Republican (Mr. Trump) or Democrat (Brandon [wink]) will win.
But how investors (especially big Wall Street funds) will react to every opinion poll and every campaign trail blunder before polling day.
So our hunch is that between now and November 5 (that’s Guy Fawkes Day in the U.K… celebrated by fireworks!) the market will do a whole lot of moving, but likely won’t be any higher than it is today.
That’s why we recommend investors take some money out of the market now. Cash in and allocate most of it to cash — perhaps 70–90% of your proceeds.
Note we say take some money out of the market. Again, we’re not saying you should sell everything. But maybe follow what your editor has done. We’ve cut back our personal stock portfolio by around a third.
Mostly growth and growth-tech stocks, and stocks that just seemed to have been going nowhere.
The stocks we’ve kept are mostly long-term dividend-payers. Stocks our colleague, Brad Thomas, would call ‘Sleep Well At Night’ (SWAN) stocks.
And with those proceeds, we’ve put most (around 80%) in interest-bearing bank deposits. For the rest, we’ve started looking around for a speculation here and there or managed investments paying a higher yield.
That confirms our point about not believing a major crash is imminent. If we thought that, there’s no way we would add speculations or higher (and riskier) yielding stocks to our portfolio.
Bottom line: the market is still risky. Don’t let the S&P 500’s recovery to near-record highs fool you into thinking otherwise.
But rather than sitting it out… and waiting for a crash or downturn that may never happen, be a bit more proactive and thoughtful instead.
There are many other strategies you can use in this market. We’ll explore those ideas further in the days ahead.
Cheers,
Kris Sayce
Editor, The Daily Cut