A Wealth of Common Sense had a great post about the Sequence of Returns which is a must read because it fits into a theme I’ve been writing about for a while now.
The Sequence of Returns post makes the argument that the time to buy stocks is when they’re getting hammered because ultimately, when they recover, the gains will be much better than simply investing in a steady state fashion.
In July, I wrote a post asking if you’re prepared for a potential lost decade should that event come to pass and I asked it with good reason. Warren Buffett has recently sold off large chunks of Apple and Bank of America stock. I firmly believe, probably like Warren, that the market is way over valued and needs a correction.
I write about the lost decade now because I’m seeing a whole lot more chatter on the topic. Bloomberg’s John Authers recently had a piece Wall Street Braces For A Lost Decade – But Not Yet which highlights the growing concern with a market that knows no bounds.
Personally, I’ve started to take some money off the table. I’ve sold some stocks in my portfolio and have begun moving to cash. I am banking some profits and will wait for a correction to get back in and I’ve been doing some research with AI here and here to determine where I may want to put money to work when the correction comes sooner or later.
As an insurance policy, I also hold puts on SPY just in case we have a mass sell off or geopolitical events get out of control.
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Are you doing anything to protect yourself from a stock market correction or crash or are you riding the bull till you get thrown off? Let me know in the comments below.