Hi Keith, There does seem to be a feeling of being invincible going around with newer investors. After all, with the market soaring ahead (all but yesterday!) it does seem that there's no chance to lose money.
People who haven't met a Kodiak sized BEAR tend to feel that way. Each AIM Sell seems to them like more lost opportunity. What they don't realize is that Cash is Latent Opportunity. AIM sells into strength and buys into weakness. With each "round trip" turning LIFO gains, just by following the business plan, there's no need to lament "lost opportunity." Lost opportunity is watching Bristol Myers Squib (BMY) drop from the $80s to the $50s knowing that you should have liberated at least a few shares in the $80s! It's knowing that at a 22 P/E at the current price that it's no bargain even yet and could fall further.
Everyone's convinced that every stock under $5/share is heading for $100 in the next week. The Wall Street Race Track is paying out on EVERY horse! Sorry, but the statistics don't bear this out. Part of the reason that the AIM BB has been quiet is that many of us aren't seeing much activity in our portfolios. Talk about a narrow market, this one's skinny!
I'm not complaining, AIM's sell advice along with the Idiot Wave's suggested Cash Reserve give me a good feeling. I know that most of the stocks in my portfolio are "over-valued" by traditional measures. AIM's Cash Reserve may have to wait a bit longer to be used, but while earning 5%, it's down side risk is minimal.
How can I be upset when I've doubled my portfolio's value in 12 months while raising the most cash I've ever had (in dollars) on hand? Right now I'm not thinking about the market's potential, but of its risk. The Idiot Wave shows two components at High Risk while the other two don't seem all that bad. I'd feel more confident if all four components were in harmony about the market's condition. I do feel there's going to be some serious pain generated in some portfolios for a while. The pendulum always swings.
I listened to Gail Dudak on the Bloomberg news this AM. She had been bearish for so long that Louis Rukeyser "removed" her from the "Elves" list! She's still bearish. I'm not bearish LONG TERM, but feel the correction coming like people do a storm coming in an old, arthritic injury. I've had good performance and a healthy insurance plan going for me for the last year. I'm happy.
Best regards, Tom |
