Sell Stocks in May and Go Away: Update May 23, 2007Posted by pf in Expenses and Savings.
I had intended to write about this during my net worth update at the end of the month, but came across an article today from CNN Money entitled “Uh oh. The individual investor is back” which make me think to go ahead and do a post now.
You may recall at the end of April, I had decided to go a bit more defensive with my mutual fund allocations (“Sell Stocks in May and Go Away?) in anticipation of a summer swoon. Appropriately, the market has done exactly the opposite and continued to reach new highs. Fortunately, I did not exit the market and so continued to enjoy some of the gains. However, probably not quite as much as I could have if I had remain invested in the more risky issues such as my international funds (for example).
As you might expect, it’s been a bit of a bummer to lose out on some of these potential gains. However, at the same time, if I felt it was time to make move before the most recent run-up, I certainly don’t feel any differently now.
Similarly, the CNN article echoes many of my sentiments about a potential pullback as investor sentiment is high and “even your grandma is getting bullish about the stock market”. In fact, I’m half tempted to take it a step further and reduce my position in equities in general. Again, I may lose out on some potential gains…or reap the consequences of being greedy. Of course, the key word here is “half-tempted” (although I seriously doubt this is really any word at all). Most likely, I’m going to stay pat and see how things play out. I must admit, it’s a bit strange being on the other side of the fence…hoping for a fall.
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. Clearly, I am no sage as far as that’s concerned.