I didn't make any year-end changes to the portfolio. I remain nearly 100% long and slightly overweighted in small caps. I also have some cash on the sidelines that has grown due to dividends, distributions and what not, that I have been debating what to do with.
Friday, December 30, 2016
I have been thinking for the past month that I wanted to rebalance, go more to cash, and maybe pick up a Dow laggard like Nike. I have been concerned that the market ramped too much after the Trump win and seeming overconfidence of the bulls. If everyone is bullish and optimistic, is there anyone left to buy stocks? 72% of the country is optimistic. Sentiment indicators are optimistic (see yardini.com for more on sentiment).
But with all the optimism in front of our faces, my Twitter feed seems strangely bearish. And many of those who I follow are top notch investors. (See my Twitter feed @muckdog). They are worried about a bear market as we transition into 2017 and a Trump administration. I've also been reading similar warnings about "market valuations not seen since" 1999 and 2006. Or was it 1987? And "whoa" those first couple years of the Reagan administration and the George W Bush administration were quite the stinkers for bulls! Doesn't history repeat itself or at least rhyme? Anyway, you get the idea. The bull market that has been running since March 2009 is no spring chicken. Bull markets don't last forever.
So I'm living in the realm of the paralysis of analysis. Too much information! TMI!
As of right now I decided to do nothing. My gut feeling tells me the Twitter bears on my twitter feed are probably right and that we see a sell off in early 2017. But my gut feelings don't usually translate to great stock returns. I will maintain current positions, overweighted in small caps, and dollar cost average in monthly. I'm still thinking about Nike...
I wish all of you and yours a very Happy New Year!