Well, I may be at risk of getting left behind but I'm going to chance it for awhile. I sold out of 2 more positions today for profits and am now 45 percent in and 55 percent cash. I just don't see the markers for a drive upward to new highs. Even though I am bullish by nature and I don't see the markers for a bear market either, I do expect a 10% or so pullback at some point soon or at least a pull back to the 2040 range that we've been trading in for a few months now. In the meantime, I'm going into research mode for a few CEF's that might be onsale to build up my Income side. Anyone else building any cash for a "fire sale"
You may have to wait a while, but I do feel you get some sale prices some time between now and December!
I would say the best strategy if your playing like that would surely be to try and calculate the intrinsic value of as many S&P 500 (or top 2000 companies for that matter) in preparation for a fire sale. In that you can know the best safety of margins and in turn the best bargains for the fire sale. I don't know just my thoughts... What do you think about that idea?
No one ever went broke taking profits and it is always good to have cash built up against market meltdowns. I normally am between 30 and 40 % in cash but not that high currently as I have more chips to take off the table when part of my position tops out. I agree with Gil on this, there are more profits coming...especially in the financials...Instead of being on the side lines I am reaching over the fence
I hear you. My income portion needs some work so I'll be looking at that hard on my research this week. On my growth portion my forte has been intermediate trend trading on growth stocks which has worked fairly well up until this sideways market. Now it is hard for individual stocks to pick up the momentum needed to sustain an uptrend. I have been looking at shorter term swings but have not gotten the comfort level to spot the good ones. If the market remains in this present sideways trading above 2040 I'll have to dip my toes in.
You know whats going to happen right? As soon as you get back in this market is going to drop -5%. Let me know the day before you decide to go long!
It's a good idea for longer term but I do include dividends in that equation as well so the company needs to be trading at a price level that is below it's average 5 year yield. I am however getting back into closed end funds which require a whole different method of due diligence so I'll be spending time on that front as I want to get at least 2 maybe 3 CEF's. They have to be selling at a discount without a fundamental reason to be discounted, not leveraged over 30 percent and distributions need to be coming without using return on capital to pay. Takes time to dig into these puppies.
The other day I posted a fairly detailed thread on how to look at a CEF it is at http://stockaholics.net/threads/a-look-at-closed-end-funds.1291/ but takes time to read it and has a lot of detail. This weekend I spent some time researching some of the CEF's looking for about 3 positions to enter into to supplement my dividend stocks and generate some steady income from the distributions. I thought I'd share with the forum how I came up with the 3 that I did to let new people know that you can do this on your own but it takes time and work. I came up with JRI, UTG, and THQ. I used my trusty Google Sheets to compare my search results. On the Summary tab the discounts and distribution rates are shown. On the tabs for each symbol looks at history of Price to NAV, Distribution History, and major holdings. The 3 I am picking are nicely diversified in both holdings and sector. Once I analyze I like to use technical signs to enter and that right now is where my lack of experience with CEF's is coming into play. The charts tell me on each of them that this is not the best entry point. CEF guru's tend to take the position that these are long term plays and you are going for the income so enter when the discounts are there and don't worry about the charts. My instincts tell me to just be patient and watch them for a bit to see how they respond to a pullback
