Buckle up folks – this is going to be a topsy-turvy summer, as evidenced by all of the government statistics that were released this past week. Readers of my market commentaries know I have been very suspicious of the markets and their current valuations. At this point, the markets are a minefield if you aren’t quite sure how to navigate them related to the risk you’re willing to take on.
That said, I imagine you are thinking, ‘Well, like in years past, we can just move our money into bonds and expect that it will hold its value until there is an opportunity to buy elsewhere.’ Historically, when government statistics are released that are negative, people begin to shift from stocks into bonds for safety. However, while bonds used to be safe, they are no longer because of the current low interest rates and the end of QE2 approaching. Outdated investment strategies still support bonds as “safe” and often-times client portfolios are moved to invest in bonds to ensure stability. However, because I understand the volatility of the bond market of late and in the near future, I am constantly seeking buying opportunities while not ruling out holding cash in order to safeguard my clients from losing money. Warren Buffett’s rule number 1 is “Never lose money.” Any guess what rule number 2 is? “Never forget rule number 1.” This is a constant mantra of mine. For my clients, rest assured that if this market gets really nasty, I have target prices for selling equity holdings based on respective 200-day exponential moving averages.
Do you have an investment strategy that will keep emotion out of your decisions of when to buy or sell? Call me to schedule a free review of your current investment portfolio – 913.693.7918.
John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit http://www.chladekwealth.com.