Scaling Out and Protecting Profits

"Danger, danger, Will Robinson!" ~ Robot from Lost in Space

As 2019 wraps up, I've made a conscious decision to sell some of our core stock holdings to lock in profits and increase our available cash.

Here are my reasons:

• Fundamentals (earnings, P/E etc) don't support current stock valuations.   Stocks appear to be overbought. 
• Several indicators show the market is overvalued.   The Buffett metric is at 145% for stock market valuation/GDP.   The metric peaked in 2008 at about 118% and in 2000 at 161%.
• Debt (personal, corporate and margin) is at an all time high, fueled by low interest rates.
• Expectations are high that the market advance will continue into 2020.

At this point, I am not exiting the market immediately nor am I exiting the market completely.   With stock trading commission going to $0, I plan to take about 10-20% of the profitable position out of the market.  Some positions I will take to zero. Others, I will remain 20-80% invested.  For the managed accounts, I will keep the amount invested at or near minimum requirements.

For clarification, I am not predicting an imminent decline.  Nor am I shorting the market.  However, I think the downside risk is much higher than the upside potential.   So I am willing to forgo some gains to sleep better at night...

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

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