MGJ,
"I am at critical mass and have been for the past 25 years. I work because I want to not because I have to. Since the age of 18 till June 2013 I was at 97% equities" : Congratulations. Excellent.
"My plan is to go 20% equities, 80% cash, bonds by year end thinking the fourth quarter will be seasonally strong exiting on strength" : Sounds good, although often the market surprises. Tons of people are expecting the stock market to be strong in the back half of the year, for various reasons. They were expecting the weakness to come in the first half of the year. I wish you well in your timed exit, and hope the market doesn't surprise you and upset your plans.
"I sit and wait for a significant pullback due to either QE coming to an end, rising rates, or both." : One of the 'tenets' of investing is supposed to be that once something becomes known, it soon gets discounted by the market. Everyone 'knows' that QE will end this year, so that fact theoretically has already been priced into the market. Same with rising rates, although Bill Gross and Jeffrey Gundlach are not in the camp that believes much in significantly rising rates in the near future.
"The Fed has propped up asset prices beyond their true value. I expect a decline at some point" : I agree with you, but we could have said that exact same thing the last day of December 2012, and we could have missed out on a 32.39% gain in the S&P 500, as many did for that very reason. We probably also could have said the same thing well before December 2012. When we say we expect a decline, that is guaranteed. Bear markets and corrections will always take place. We just don't know when, or how low the decline will take us.
"My moves here are more to preserve my critical mass." : That's the part that makes the most sense to me. Since you have had critical mass for the past 25 years, seems like a great move to ensure that you have whatever amount of money you want in safe assets, in case a financial crisis occurs. The financial author Bill Bernstein is a strong advocate of having a very substantial number of years worth of liabilities [expenses] covered with safe money, assets that will not go down [or at least not by much] in a financial crisis.
Again, congratulations, and best wishes with this.
I hope you'll keep us informed on a regular basis as to how this is coming along, and especially when you decide to pull the trigger and make your move.
Cheers,
ETF1 Robert |
