tag:blogger.com,1999:blog-2986124651030959736.post8674481402387910517..comments2024-03-28T09:42:38.695-05:00Comments on Stocks, Bonds & Politics: NVS, MKZ, FULL, Realty Income, BDN/Borden Chemical And Penn Virginia Resources Bond Calls/Bought 50 Wharf Holdings at $12.2, 100 CSG at $7.73, 66 KIO at $17.95 (partial fill), 50 FNCL at $26.57,100 Cominar REIT at C$18.14/Sold: 50 NNNPRD at $24.06, 50 RZA at $26.07TENNINDEPENDENThttp://www.blogger.com/profile/17444227958539559639noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2986124651030959736.post-71129095858358540262014-04-01T21:52:16.716-05:002014-04-01T21:52:16.716-05:00PETER: A normal cash allocation for me is 20%. In ...PETER: A normal cash allocation for me is 20%. In 2007, I went over 30% but I was receiving as I recall over 4% then in a MM. Unfortunately, Uncle Ben will not allow me to earn anything on that cash. Even with that high cash allocation, I try to outperform the S & P 500 with a much lower risk/volatility profile (in part due to the cash) and considerably more income. Sometimes I do it and last year I did not as my bonds dragged me down. <br /><br />The cash serves several purposes:<br /><br />1. It is like putting a pacifier in the OG's mouth on those nasty days and really bad downturns (e.g,2008)<br /><br />2. It is psychologically important to have that cash around gathering rays during a downturn since it makes it easier to buy something when most of what I own is getting shellacked. <br /><br />3. With the cash, I do not have to sell something that has probably gone down in price to buy something else that has gone down in price. <br /><br />4. I no longer need to be right about my big picture views that drive allocation decisions. <br /><br />It may not be the best approach for others, depending on how well they deal with market downturns, their age (not retired), and current and projected earnings. I have no earned income. <br /><br />The short term views about the market could be summed up simply by saying that the market needs a correction and I hope to see one soon. If it continues going up without one, the odds of a nasty market event like October 1987 increase in my opinion. <br /><br />I have not changed my stock allocation down in anticipation of a correction. If anything I increased my stock allocation due in part to the sector rotation to REIT common stocks, financed out of cash, and other stock and fund purchases:<br /><br />I know you are familiar with my Stock Fund Updates where I attempt to measure whether my overall allocation is moving up or down:<br /><br />http://tennesseeindependent.blogspot.com/2014/02/stock-fund-update-as-of-22814.html<br /><br />In that February post, I figured that I had added over $23,000. <br /><br />I am finding it very difficult to find stocks to meet my valuation criteria with only a few non-REIT coming within those parameters recently, including an add to NVS and the initiation of positions in MET, COP, PEP and CNQ. I would welcome a relatively quick correction, typical for an ongoing bull market, such as the ones occurring in 2010 and 2011, which clearly defines for me opportunities to redeploy assets (e.g. sell bonds/buy stocks) or to dip into cash reserves to pick up something worthwhile at a much lower price.TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-8202970453625609302014-04-01T20:49:53.041-05:002014-04-01T20:49:53.041-05:00Hi Southgent,
I noticed that you have shifted fro...Hi Southgent,<br /><br />I noticed that you have shifted from "expecting a correction", to "hoping for a correction", and now to "The market needs a correction".<br /><br />Ken Fisher says only two things can stop the bull market: "losing steam" or "newly emergent wall".<br />http://www.forbes.com/sites/kenfisher/2014/03/26/only-two-things-can-stop-the-bull-market/.<br /><br />Maybe it will be fortunate (or maybe unfortunate depending on your allocations)that the correction will never come. How would you want to deploy the 20% cash if this correction is less likely to occur?<br /><br />Regards,<br />PeterAnonymousnoreply@blogger.com