I'm Not Buying this Rally

This market rally defies logic. It's like the energizer bunny. It keeps going, going, and going. However, I am still resisting buying. To me it looks 2007 again. That's when the mortgage crisis was looming and many expected the housing market to crash. Yet, the market kept advancing until October, 2007.

However, one never knows when a bear market has ended and the next bull market has begun. If the current rally is a bear market rally, it may also last several months.

So here's our plan:

Keep core holdings. For now, we will continue to maintain our managed accounts at the minimum requirements. In addition, we will continue to hold Google and my company stock. I did sell off Amazon and Monsanto in our trading accounts, hoping to buy them back at a lower price.

Thus, we will participate in the rally as it continues.

Avoid new stock purchases. We're not adding any new equities to our investment or trading accounts. We may buy back Amazon and Monsanto, which we consider core holdings.

We don't want to put new funds at risk of declining. It would put our early retirement in jeopardy.

Sell into the rally. We will continue to take profits when the value of managed accounts increase above minimums, or select stocks advance past their purchase price. For example, I plan to sell Potash and Range Resources once they pass the original purchase price.

This will raise some cash we can reinvest when the market corrects.

At this point, I am itching to buy and to benefit even more from the rally. However, for now, I will remain disciplined and wait for the inevitable correction before making major additional purchases.

Disclosure: At time of publication, we own Google, Potash and Range resources in our trading accounts. Amazon, Google, Range Resources, and Monsanto are owned in our managed accounts.

For more on Strategies and Plans, check back every Monday for a new segment.

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

Copyright © 2009 Achievement Catalyst, LLC