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Strategies & Market Trends : Value Investing
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To: Madharry who wrote (76233)9/27/2024 1:19:39 PM
From: Paul Senior1 Recommendation

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"The interesting question for me as a non market timer is when do stocks get so overbought that its only prudent to build a cash reserve."

I have this as a problem too. Not so much as "when", because I believe "when" is now. What can realistically be considered an upside to the market from here? 5% more? 10% more going through 2025? Just feels like some unexpected event will likely cause a downside to an overextended market.

Although I've raised cash to maybe 20% or more, I'm having some difficulty in bringing myself to sell down or out of positions, especially for stocks held for years, even as I have held them through their fluctuations. (Many in ira/Roth, so there's no tax consequence triggered if I were to sell.)

For stocks I've held two years and they're in the red for me, my general rule (ala B. Graham) is to sell and move on. This can be a mistake if the business performs as I expected, but the stock has not. Following my rule though is mechanical enough to where I at least have a decision to act upon with these type stocks.
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