Tuesday, February 01, 2011

Tuesday Market Thoughts

Earlier I wrote about the monthly strength period. Here's a picture of how things really look if you had only invested the first day of the month, and sat in cash the rest of the month. (h/t Bespokeinvest.com). IMPRESSIVE!

Anyway. We've now had seven months in a row where the first day of the month is positive. And that's fourteen of sixteen. Sweet.

As you know, I sold a bunch of beta (think Nasdaq and NDX type of stocks) on January 18th. I think that's the date, as it was two weeks ago today. It looked good initially as the market crapped out over the next few days, rallied last week, and then fell apart Friday with the events in Egypt spooking investors.

Today, the market had one heck of a rally. Reason du jour is that, eh, Egypt-Shmegypt. The Suez canal is still open!

Where do I stand? I remain mostly invested, although nothing in the high-beta stuff. As I mentioned two weeks ago, I'm mostly in the generic VTI and VGI at this point.

Just a reminder... February is the 3rd worst month for market returns. You wouldn't know that by today, or by 1986 when the Dow returned over 8%. But history is history. There must be a reason February is a bit gloomy (most of the time). Oil prices are rising and you may have seen that at the pump. I think the fear premium of Egypt is partially to blame, but we also have an economy that was growing at 3.2% in the last quarter. More energy for the growing economy.

Oh, and the first of the month is over. There will be no gains for the rest of the month. ;)

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