The importance of paying attention and being decisiveI can't disagree with Experienced in his belief that some day, the market is going to have to pay the piper for its careless handling of debt. The philosophy of pushing the debt problem down the road will only continue for as long as someone is willing to buy the debt.
With the FED and other central banks being the only real buyers of debt, one has to wonder about the validity of debt and as such the entire house of cards built on debt.
What happens when the music stops in this make believe world of musical chairs?
I don't know the anwer to that as it is above my pay grade.
The one thing I do know after keeping track of the doomsday sayers (ZeroHedge etc) is that we are still here despite decades of warnings
I also know at this stage of my life that in times of inflation, sitting on cash is not a winning formula.
So what does one do when storm clouds remain on the horizon for days/weeks/months or even years?
You go on about your business but you have to always keep an eye on the horizon.
We all want to be sitting on the sidelines with a stack of cash waiting for the day that we can pick up blue chip stocks for pennies on the dollar. We saw a perfect example of that in March of 2020.
But how many of us were in 100% cash in March 2020? I was, but it was more about situational luck than skill. I happened to be doing a lot of importing from China at the time and was getting real time updates about the lock downs when Trump was telling us that the China virus was nothing to worry about.
Despite my good fortune, I still didn't reload at the bottom. When the Dow was at 18,000 (down 40%) I was asking myself if we were going to see 12,000 (a 60% drop) or worse.
I missed the great March buy-in at the bottom but I was lucky (bold?) enough to get back in by summer and have ridden the Dow back up.
The takeaway is that you need to be calm but ever-vigilant, and decisive. Self-doubt is a killer when it comes to the market and life in general.
With the ability to sell thousands or hundreds of thousands or even millions of dollars worth of stox for $10, commission costs have become irrelevant.
What I think I know is that you need to be in the market when the going is good but you also need to be watching carefully and be prepared to exit the market at any time. To that end, I think it is imperative to be invested in highly liquid stox such as the SU or ENB or the banks etc. when storm clouds are on the horizion.