Here we are in the middle of first-quarter earnings reports. So far stocks have chosen to take a ho-hum attitude.
This has to be a little unnerving for investors, who have added to their holdings in the last 30 days or so.
In our opinion, such lackluster performance by stocks suggests to us that the next significant move in the market will be down.
Shift to Cash
If it hadn’t been for a welcome recovery in the price of oil,
the next downtrend in stock prices might have already been underway in our view.
If you add to the mix the ongoing struggles in China and Europe for economic recovery, coupled with tepid growth here in our own country, we believe investors would be well advised to raise the cash portion of their portfolios to at least 25%.
We expect to see a traders’ buying opportunity toward the end of June in our opinion, which would be right before the next round of quarterly earnings reports are due to be released.
On the other hand, for long-term investors who can tolerate continuing violent moves in the market, a buy-and-hold approach, over the longer term, should continue to serve them well in our view.