My Investing Dilemma

"If it's too good to be true, it probably is."  ~  old adage

The market returns have been unexpectedly and shockingly great in January.   I fully expected at least a small pullback as investors locked in 2017 gains and sold on the news of tax reform.   However, the market has continued to march upward, showing the enthusiasm of investors for the stock market.

I did add some funds this month, but much less than I was planning to do.  I am now faced with a decision of adding significant funds just before a pullback or holding back and missing another 5% advance.   Of course, a third scenario would be adding significant funds just before another 5% advance, but I give this a low probability:-)

I recall in 2007, I faced the same decision.   Without much concern, I put a significant amount of retirement cash into equities.   Everything was going up; my company stock was at an all time high; the indices were at an all time high.   A year later about 40% of our retirement savings were wiped out by the great recession.   The memory keeps me from jumping into a rising market without caution.

So my plan now is to stay invested in our managed accounts, which have all done exceptionally well in January, and continue to take profits when the account exceed the minimum required amounts by 1-2%.   Since I am currently underexposed to international stocks, I will slowly add funds to select international commission free ETFs until the target investment levels are reached.   That way if the market corrects, I will mitigate our losses and acquire some shares at a lower cost basis.

However, now I will be waiting for a correction before adding significant funds to equity investments.

For more on Reflections and Musings, check back Saturdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

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