Wednesday, April 29, 2020

Not Chasing the Market

The S&P is up 31% from its March 23 closing low.  April is on track for the best month since 1974.   Some stocks are hitting new highs.

I'm not chasing this market.  I'm taking the opportunity to sell into the rally and take some profits.

To me, the rally isn't sustainable.

  • The S&P index is being driving by 5 stocks, Amazon, Google, Microsoft, Facebook and Apple, that account for 21% of the index movement.
  • About 80% of S&P stocks are down over 20% from their 52 week high.
  • Fundamentals still show stocks to be "expensive."
  • Economic recover from lockdown won't be fast.
  • COVID-19 may have a second spike with reopening or in the fall.
At this point, the downside risk is greater than the upside rewards, much greater.   For now, I'm being conservative and reducing my exposure to equities.

I expect another deeper decline later, and will wait before putting significant funds back into the market.

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

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2020 Achievement Catalyst, LLC

No comments: