Do any of you remember what you were thinking regarding your investments (or trading strategies) way, way back in December, 2007? I do, and that memory is as clear as a ringing bell …
In December of that year, I marveled at my incredible portfolio returns for the previous three years (21% year over year). In that same December, I also thought, this cannot keep going. Everything I touched seemingly turned to gold (although I had very little exposure to gold back then). I also thought, now is the time to take some off the top. It seemed the “prudent” thing to do. Well, long story short, I did not …
Then came January, and the world seemed as it had been, until I started getting hints about the coming problems with the MBS (mortgage-backed securities) world. Into February and March, and the rumblings kept coming, always just a bit louder. By then, though, the market had begun its downward trend, and I thought I should get into cash, but I did not. I vacillated, hemmed, hawed, and dithered my way to thinking that things would turn around. Well, we all know how this story ends as the year relentlessly marched toward the pending collapse …
I learned a valuable lesson back then – do not hesitate when what you know and what you feel are guiding you to a decision. I cannot emphasize this lesson enough. If you have been involved in the market enough time to “pocket” some understanding of how it works, then you too have the capability to understand what the market is saying. Back then, it was telling me I should get to cash, as there were forces at work driving the market down. I did not listen.
Today, I am listening much more clearly to what the market is telling me. The voice speaking quietly in my ear is telling me to get fully in, which is the exact opposite of what I heard back in December 2007. This time, the market direction is up, not down, and it will move in that direction for some time.
Private employers added 201,000 jobs in March … The number of planned layoffs at U.S. firms fell in March, despite continued downsizing in the public sector … “It looks like the U.S. economic recovery continues, and the improving labor market should be a buffer against weak areas like real estate.”
The market over the past week (even with light volume) is outperforming the bad headlines, and, as well, it is not overreacting to the good headlines. Steady as she goes … I like steady, which is unlike the heady run up from 2004 to 2007, and eerily so, remarkably similar to the steady downturn throughout 2008. Yes, the market is speaking clearly and softly into my ear – “Now is the time …” And so, I am heeding the voice, even though I understand that some scary bumps in the road await us all as we climb the hill back to prosperity, even though the short term might get ugly. Yes, I am listening to the market because the market is always right.
Trade in the day – Invest in your life …
