Those of you who have followed me over the years know that I was slow to warm to this bull market. However, in the last year I have evolved and come to embrace it.
The Top Gun Financial portfolio is up more than 20% this year through September 15th and has outperformed the S&P 500 Index (SPX).
However, I am starting to get nervous again. The S&P recently tagged reached 2000, which marks a 200% advance from its March 2009 lows. That’s quite a number that makes me wonder about where we go from here. This roller coaster could be heading for a dip.
Still a long-term bull
One major concern is what happens when the U.S. Federal Reserve starts raising interest rates. While a recent Reuters survey suggests this will not happen until mid-2015, if the job market rebounds strongly it could pull that timetable forward.
Doug Ramsey, Chief Investment Officer at Leuthold Group, is calling for a correction. “We are expecting and 8% to 10% correction for the S&P 500 over the next two months. There is a good chance that it would wipe out all the gains for the year,” he told The Wall Street Journal.
As a result, I have started trimming some positions. I sold our large position in Lifelock (LOCK). I also cut our positions in JC Penney (JCP) and Apollo Group (APOL) in half.
Should any other stocks reach my targets, I wouldn’t hesitate to raise even more cash.
This doesn’t mean that I am turning bearish. It just strikes me as a good time to raise a little cash when times are good and in case better opportunities present themselves down the road.
DISCLAIMER: The investments discussed are held in client accounts as of August 31, 2014. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.