Market speculation isn’t easy.
When I made my decision to move my retirement portfolio into cash a little less than two years ago, I jumped the gun and got out too soon. If I’d have waited just a few months, I could have gotten out at a higher level. But, you know what they say.. hindsight is 20-20.
Regardless, it turned out that I’m ahead of the game now because I stuck to my guns in my belief of the recession-predictive qualities of the inverted yield curve theory, which states that a recession will occur within 2-6 quarters after the occurrence of an inverted yield curve. So far, this prediction is becoming reality. We’ll only “know” retrospectively.
The good thing is that I’ve learned my lesson about jumping the gun too soon. Now, that I’m back in the black, I’ve been itching to get back in the stock market, but only because of fear that I may be left out if I made the wrong choice.
This fear is powerful, but I’m trying to remain on course until everyone else realizes that we’ve entered a recession, and the stock market falls even further. Between this week and the next few months, I believe investors will come to that realization, and at that time I’ll make my move.
Although I’m tempted to get back in right now, I just have to keep in mind…
Comments 2
Interesting, I forgot about the inverted yield curve theory, but you’re right it does seem to be playing out.
I think we’ve still got some bleeding to do before we hit bottom, so I think your decision to continue sitting on your cash is a good one.
When you DO start buying, do so in small blocks, as it will be tough to pick the absolute bottom of this mess!
I dig the vid too!
-Grant
Posted 02 Mar 2008 at 5:54 pm ¶Its looks like the “Fed’s” inverted yield curve theory has worked out to be a very accurate recession predictor. I’m sure we’ll be hearing more about it once the recession is “officially” declared by the NBER, not just Warren Buffett.
It was hard sitting in cash and watching the market take off once I got out. The good part was that Vanguard’s Prime Money Market Fund was yielding over 5%, so it wasn’t like I was “losing” money.
It’s funny you mention buying in small blocks. I was thinking the same thing myself. I notice through reading your blog that we have similar thoughts and opinions.
I’m not comfortable playing around with my retirement portfolio, so I’ll most likely move it back into the same Vanguard Target-Retirement Mutual Fund (VTTVX) that I had it in prior to moving into cash. As long as I get back in at a lower price than I got out, I’ll consider my “market-timing adventure” to be successful.
As an aside, while some investors would consider Vanguard’s Target Retirement Funds unsophisticated, I find them an excellent way to diversify appropriately, easily, and inexpensively. They’re great for me.
Like the vid?
Heheh, I actually try to find videos that are humorous and entertaining, but also help me make my point. It’s an unique process for a financial blog, but I’m an unusual guy.
Thanks for stopping by Grant.
Posted 04 Mar 2008 at 12:19 am ¶Post a Comment