Wednesday, September 12, 2012

Protecting Principal

Call me skeptical.  Despite the recent rally, I think there is still too much divergence between the market and economic data to put substantial funds into stocks again.   I do believe the Fed action to keep interest rates, whatever it may be, will cause the market to rise further.  My concern is the advance may be similar to the 2007 peak before the start of the recession.   At that time, I didn't see any downside to the market and put substantial funds into equities, which the declined 60% over the next year.

I learned from my 2007 experience.  This time, I will be more cautious.   If I decide to invest, I will  commit limited funds at what may be a near term peak and then waiting for a correction to add more funds.   In addition, I will offset some risk by exercising some stock options as my company stock (hopefully) advances with the rest of the stock market.  

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

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

Copyright © 2012 Achievement Catalyst, LLC

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