Investor Comfort Levels

The markets have been on a slippery slope in part thanks to the price of oil catapulting above its $100/barrel threshold.

This is likely to continue throughout next week and beyond as unrest in the Middle East and N. Africa is sure to draw attention. The effect will likely be that the major indexes will again be torn by bullish and bearish sentiment as fears of a consumer slowdown and a subsequent derailing of the recovery will remain a major concern.

That’s the negative. The positive is that the domestic labor markets, at least in the latest report, have given encouragement that we finally may have turned the corner.

So what’s an investor to do?

Here is reader Bill’s response:

During the last drop I lost about 30%. Recently I have recovered that plus some and just don’t see the funds I have going much higher. The replacement broker I have (for one who retired) is leery about making recommendations. So I went to cash with about $300k and am comfortable. I am looking for a time to get back in.

Bill brings up a topic I have touched on every so often but it bears repeating and that is the comfort level of the investor. While most readers prefer staying in the market until there is a reason to get out, such as a trailing sell stop being hit or a trend line crossing to the downside, there is nothing wrong with Bill’s decision.

After all, if you are not comfortable with current market conditions and don’t want any exposure at all, then that’s what you should go with. While you may miss out on some opportunities, it does not really matter.

What matters is what lets you sleep at night—and you’ll be the only one that can judge that. Don’t let anybody tell you different.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
This entry was posted in Uncategorized. Bookmark the permalink.