Time to take some gains off of the table

Bull MarketWith the S&P 500 now at 1472 investor confidence appears to be at a high.  The recent closing reinforces FPO’s forecast of being above 1400 come February 1st, but does that mean that its wise to stay in stocks?

As the investor, you are not your customer.  Your goal is to make money.  As such, if something is being made out to be an attractive buy, as stocks have been this last month, your job should be focusing on fulfilling that demand.  It is time to sell.  It doesn’t have to be a 100% move away from stocks, but taking some gains off of the table and going for what others are dumping is what the smart money is doing; by either selling into this rally or by moving all of their money elsewhere.  Attractive options include bonds, real estate, and commodities other than gold (which is still relatively high).

This principle of serving as a facilitator to the markets is close to being a “market maker”.  In the strictest definition, a market maker simultaneously buys and sells all asset classes that they participate in at their predefined spread.  They operate at a large scale of economy which is why they can command this spread, however they must participate on both ends which means bearing risks of buying assets when there may be no one to sell to.  The average investor does not operate with the economy of scale of a true market maker, but their position is better in that they can choose what they buy and sell.

Seems simple, right?  Investing techniques can be heavily determined by charts and valuation data.  In fact doing so, is an essential part to being successful.  At it’s roots, investments are made by individuals, which are subject to behavioral patterns.  Part of the basic programming here is to buy what looks attractive.  This runs contrary to money making principles, which dictate to sell what looks attractive and use the proceeds to buy something of value.

About Steve @ FPO
Hello FPO readers, I have been writing on financial topics for about 12 years now, but I have only recently reignited the fire of publishing online. I have to say, its good to be back. I am an electrical engineer by trade who enjoys all topics engineering and financial. I started Financial Place Online (FPO) to create a value added financial news and education website that would provide a refreshing daily financial read. Financial Place Online websites are built around the principles of consumer empowerment, leveling the playing field, zero spam tolerance, and none of those annoying sidebar or banner ads. For us, it's all about enjoying a good read.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blockchain and robotic automated systems

Evolution in Investment world

Carlisle Mitchell - Real Estate

Carlisle Mitchell - Insider Tips for Real Estate Investors. Expert investment & market analysis for real estate investors world-wide.

Writing in Color

Because Life is More than Black and White

Finance Gateway

Finance Plan Makes Your Future

politicsandreason

Discuss politics with civility and reason

LilyPetal

Either write something worth reading or do something worth writing

My Mom Thoughts

Thoughts and Recipes by Marie

%d bloggers like this: