Prepare for Hibernation
As mentioned in my previous posts, the stock market should continue falling the closer we get to the predicted December interest rate hike. In fact, it has already turned course over the last few weeks and is expected to continue falling as people cash out their gains made over 2016.
I wouldn’t expect a sudden market crash, but don’t be surprised if the market trended downwards in the intermediate term as interest rates are brought back up to “normal” levels over the next year or two.
Currently my portfolio is about 50% invested: out of that 50% about half is bearish positions in overvalued securities (Puts, bearish ETFs, short stocks) and the other half are bullish positions in value ETFs. Although I’m still open to entering bullish positions, I stay in them for a shorter period of time, buying only when the market experiences a significant intraday dip and quickly selling for a modest profit.
My overall strategy is to continue being very picky when entering bullish positions, while also not allocating too large of my portfolio to bearish positions (although the market is expected to dip in the future, nothing is ever guaranteed).
Take caution during these times and do not let greed tempt you into entering bullish positions only be stuck holding the bag as the market falls. Take advantage of other people’s greed by entering opportunistic bearish positions while the market is still at reasonably high valuations.
Also, the Stock Market Analysis workbook has been updated with data as of 10/4/16. Check it out (it’s a free Excel download).