Saturday, August 15, 2009

Time for Defense – Stagnant Market

Thanks to no small amount of luck and some very good stock/ETF choices (Ford, KOL, Financials) my 401k and IRA have finally recovered to break even levels. To do that, certain investments I made are up 40% in less than one year.

  1. That kind of performance is an aberration. It is not sustainable.
  2. In the coming months, I think the stock market will be stagnant to slightly down.


My Strategy:

  1. With the IRA, to which I cannot add money, I will remain defensive. I have sold some of my big winners. Since I don't have any good "new" stock ideas right now, I am gradually buying total market ETFs. In addition, I am going to buy $5,000 in the next auction of 5 year TIPS.
  2. With the 401k, I am going to continue to buy equities. Through the power of dollar cost averaging, I will benefit from any market pullbacks (provided they are short term) in the long run.

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