Wednesday, October 11, 2017

My New Pain Trade Signal

"Markets tend to deliver the maximum amount of punishment to the most investors from time to time." ~ Wall Street Adage

The current greatest pain trade is shorting the market.   The next biggest pain trade is not being invested and being entirely in cash.   Interestingly, investors in these situations don't feel they are in a pain trade.   Most of them still feel they are right, but perhaps a bit early.

These investors are convinced that a market correction is imminent and refuse to consider that the possibility of the bull market continuing.  As long these investors continue to justify their investing strategy, the market will continue to grind up and perhaps even melt up.   It's when these investors finally throw in the towel and admit their pain trade that I will worry about a market top.

For now, I am still bullish, but also cautious.  So I am taking some profits in our trading positions, while maintaining our core holdings, which will continue to benefit from the rising market.

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

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

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