I agree with you. This may be nowhere over. The FED surprised me with their hawkish forward guidance. The yield curve was partially inverted prior to this rate hike. The president remains volatile. In the end he desires the stock market not be completely wrecked while the economy is still very good in relative terms. World stock markets are hurting and the trade war is a huge threat. Money has left the market. They will miss much of the ride back up, whatever month or year it occurs. It really doesn't matter why we are here, but it is clear to me we aren't going straight back up. We'll get a relief rally at some point. Perhaps that presents an opportunity to adjust my sector allocations?
My plan is to proceed slowly. Slower than I have been since OCT for sure. I was investing $10K most weeks in the equity market when a fraction of that would have been prudent. But hindsight is 20/20 and nobody knows where the bottom is. I thought it was merely a routine correction and this was the downside risk. That no longer appears likely. I have not touched my crash fund yet, and I won't until a true bear market occurs. Another 10% drop would get me started, but that's just a number. I'll have to be patient. I don't want to have zero cash at my age. In the meantime I have other cash to invest, but not much compared to just a few months ago. I'll make small buys from this point. I am not investing any money I might need in the next 5-6 years. If that's not good enough, well I tried to not be overly conservative.
To your point on the other thread, very few stocks are deeply undervalued. They are merely less expensive than they were the past few years. It jades our opinion. Mine anyway as I am accustomed to higher PEs that were once unacceptable. If you don't need your money for 20 years, history says it matters much less if you overpay. But simple math says buying when 50% down is going to make your portfolio a lot larger than buying more shares when they are 15% down. But GIS has a 5% yield and expected to grow revenues. There are others at 4% now that don't look shaky. That's as close as it gets to a winning long term bet in a dividend portfolio. Higher yields remain attractive when interest rates rise. A 1% dividend not so much, if at all.
A good percentage of my port will remain defensive in utilities, healthcare, and select DGI stocks I know are somewhat recession proof. A huge market drop and a subsequent recovery of economy would be required to alter that plan.
What I won't do is sell and go to cash no matter how bad it gets. You never recover from that because you'll miss the run. Hedge funds will try, and 90% will lose the bet, just like always.
My plan is to proceed slowly. Slower than I have been since OCT for sure. I was investing $10K most weeks in the equity market when a fraction of that would have been prudent. But hindsight is 20/20 and nobody knows where the bottom is. I thought it was merely a routine correction and this was the downside risk. That no longer appears likely. I have not touched my crash fund yet, and I won't until a true bear market occurs. Another 10% drop would get me started, but that's just a number. I'll have to be patient. I don't want to have zero cash at my age. In the meantime I have other cash to invest, but not much compared to just a few months ago. I'll make small buys from this point. I am not investing any money I might need in the next 5-6 years. If that's not good enough, well I tried to not be overly conservative.
To your point on the other thread, very few stocks are deeply undervalued. They are merely less expensive than they were the past few years. It jades our opinion. Mine anyway as I am accustomed to higher PEs that were once unacceptable. If you don't need your money for 20 years, history says it matters much less if you overpay. But simple math says buying when 50% down is going to make your portfolio a lot larger than buying more shares when they are 15% down. But GIS has a 5% yield and expected to grow revenues. There are others at 4% now that don't look shaky. That's as close as it gets to a winning long term bet in a dividend portfolio. Higher yields remain attractive when interest rates rise. A 1% dividend not so much, if at all.
A good percentage of my port will remain defensive in utilities, healthcare, and select DGI stocks I know are somewhat recession proof. A huge market drop and a subsequent recovery of economy would be required to alter that plan.
What I won't do is sell and go to cash no matter how bad it gets. You never recover from that because you'll miss the run. Hedge funds will try, and 90% will lose the bet, just like always.