Sunday, February 05, 2012

Stocks or Not Dilemma

Since June 2011, I have been mostly in cash, with the exception of my company stock and company stock options.   As a result, we have mostly missed the exciting volatility of the past eight months.   However, rally in December 2011 and January 2012 have caused me to reconsider our lack of stock investments, other than my company stock. 

For example, my spouse decided to stay invested  in her College 529 account, while I moved my entirely to cash.  While her account fell significantly below mine from August to September 2011, it is about 3% above mine at this point.  Also, several stocks that I sold in June 2011 are now above the price at which I sold.  

Friday's jobs and unemployment report was very positive.  In addition, the Fed has committed to a low interest rate policy until 2014.   These events point to an upward trend for the stock market in 2012.  However, the looming default of Greece remains a major negative.  The EU politicians continue to give the appearance of saving Greece and the EU, which investors read as a positive.  However, the charade cannot last past March 20, 2012 when 14.4 billion Euros come due.  It will be difficult for the markets to remain positive after a Greek default on that date.

Just like everyone else, I want to believe the politicians know enough to head of a financial catastrophe in March 2012.   Being a pessimist due to my experience in 2008,  I think investors are being overly optimistic.  I still don't think it's time to be heavily invested in stocks....yet.

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

Copyright © 2012 Achievement Catalyst, LLC


Kurt said...

I'm with you. After seeing in 2008 the very real prospect of a retirement nest egg invested in equities going "poof" almost overnight, I've lost my nerve. Only about 18% of my financial assets are in equities, and I'm looking at the current rally as an opportunity to sell more. Contrary to the drumbeat message of the high-powered Wall Street marketing machine, I believe a happy, prosperous retirement and avoiding equities are fully compatible.

Kanwal Sarai @ Simply Investing said...

I'm more of an optimist, but I agree with your decision to stay out. You have to be comfortable investing and be able to sleep at night.