Stock Market Reappraisal

We have had a great rally since March 2009, but four months ago I said that I was becoming cautious and taking some money off the table.  Since then the market declined and the general mood became dark.  Porter Stansbury is warning of "the end of America" and recommending that investors hold nothing but gold and cash.  There is a great deal of worry about a "double dip".  Congress can not manage the budget.  Etc., Etc.

Well, two weeks ago this pessimism seemed to be getting out of hand. How can we have reached a major market top with so many people pessimistic?  Major tops are usually reached when there is a feeling of euphoria.  While market averages have peaked, the cumulative advance/decline line keeps going up.  At major tops it is the other way around.  So I began buying and by the end of the week I was fully invested again.  Then we flew to New York and while we were there the market advanced every day.

While I am fully invested, I am very cautiously invested.  I am heavily weighted in stocks that pay a significant dividend.  I have tried to minimize my exposure to a decline in the purchasing power of the dollar by investing in foreign countries, particularly Canada, and in US blue chips that do a major business overseas.  I have tried to invest in uncorrelated asset classes, but that is not as easy to do as it sounds.  All my positions are long term investments.  Time is on my side and I want to be able to travel to remote places without having to check to see how the market is doing.

Incidentally, I see little signs that remind me of the 1970s.  Silver is popular again.  Investors have purchased Iowa farmland and driven the price to outlandish levels.  Rare postage stamps are an investment again.  Real estate is becoming a popular investment as an alternative to stocks.

If you follow this blog (and nobody does), do not count on me to inform you if I change my investment view in the future.