I’m still about 25% cash, 20% fixed income (munis), and 55% stocks. I’m guessing that this is where I’ll most likely stay allocated through the end of this quarter.
This market is conflicted. We have a government policy of trying to inflate the economy and banks tightening lending standards. We have oil and commodity prices falling, but weak economic indicators. The market has been rallying somewhat in the face of a developing global slowdown. We also have credit spreads on low-quality issuers widening while we are seeing a rally in small cap stocks.
Does anybody know what’s going on? …..Didn’t think so.
I expect more of the same going forward.
We are entering into the time of year when seasonality factors come into play. September can be a difficult month to navigate through, (although this hasn’t been the case since 2003).
However, this is the time to stay defensive, keep the trading short term, set tighter stops, take profits often, and have some cash available for when the picture becomes clearer.
A word on investment strategy: when you’re in the funhouse, if a scary clown pops up from behind a door, punch him in the face and run.
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