Stock Market Correction: Now? June 7, 2007Posted by pf in Expenses and Savings, Goals, Portfolio Allocation.
A little over a week ago, I had given an update (Sell Stocks in May and Go Away: Update) on how things were going since I went into a more defensive position with my equity holdings. In it, I offered the parting comments below:
“Anyway, if you’ve been thinking about this topic, but have not yet been able to make a firm decision, there is still time to act. Whether or not you’ll be correct in your timing…that’s another thing entirely.”
The last couple of days have not been kind to the equity markets and the Dow is down about another 200 points or so again today. While not as jolting as the sharp correction we had earlier this year, the mood has definitely changed with people taking a dimmer view on the possibility of rate cuts and taking more notice of things like a tight labor market, wage inflation, etc. Mortgage rates are also climbing, potentially exacerbating an already slumping housing market.
What does this all mean? I don’t really know, but am glad to see the markets taking more notice of some of the risks that are facing us (all is not rosy). However, I would like to see it drop a bit more before I would consider shifting my assets back into my desired long term allocations (Portfolio Allocation - Update).
Of course, the drops of the last couple of days are bittersweet as I did not reduce my risk exposure to zero. For example, my portfolio showed a paper loss of almost $1900 yesterday alone. Granted, it would have been quite a bit more had I not modified my portfolio earlier this month.
Like all of you, I will continue to watch with great interest over the coming days/weeks.