JDN, I exited because I'm super cautious. I agree with all of your points EXCEPT long term rates -- I think they will rise, not necessarily because of inflation, but because of increasing concerns about an "overheated" economy. Also, the dollar's not doing so hot lately, which hurts bonds by lessening their attractiveness to foreign investors.
I could be back in the stock market as soon as tomorrow -- two of my moderate models said to jump back in today. I do think this "correction" will hit its bottom soon because of cash being handed to so many workers in Christmas bonuses, year-end bonuses, profit-sharing plans, company 401k distributions, etc. And most of that will be pumped into the stock market by early February.
A second reason why I ducked out yesterday is concern about the divergence between the NASDAQ and the broad market. The NYSE still hasn't topped last summer's peak, and it's been basically flat as the NASDAQ soared. To me, big divergences imply upcoming volatility and a potential "snap-back" effect as the professionals unwind from one type of stock and rotate into another type. I had a wonderful 2-month run with FDEGX, and now I'm content to wait for a more reliable buy opportunity.
My appreciation of the buy-and-hold strategy hasn't waned, I assure you. And I do still think SUNW is a great company! (If you only knew how hard MSFT made it to put two almost identical applications that use similar components on a single server! Can't you just put the programs in different directories? Guess again!).
Kevin |
