My daily blog on February 1st, 2018 talked about why we sold our MDY stocks position and moved into our safety IEF bonds and GLD gold positions. It’s here if you missed it.
From that blog, we sold MDY Stocks on Jan. 29, 2018. (We were also in cash across the board in all our volatility strategies)
Now of course as investors we never know what’s coming next. We can only maximize our probability of success and the volatility metrics that week were definitely flashing warning signs. The VTS Tactical Balanced Strategy doesn’t always get it right, but it’s mainly designed to move out of danger as early as possible in hopes of avoiding larger drops. Looking back now of course we know what happened and we’re feeling a little bit Neo in the Matrix
The S&P 500 proceeded to drop over -10% since we sold it, finally giving us that long awaited correction. It was a legitimate scare there for a few days and it could have easily gone lower. And remember at some point in the future it will. 9+ years into this bull market with valuations frothy, at some point it’s going to happen. When it does I know I’ll feel a lot more comfortable holding bonds and gold than I would holding stocks. History has shown that to be the wiser position.
But things are normalizing a little bit in the last few days which means it’s time to start dipping a toe in the water again.
Now normalizing does not mean normal and I don’t think it would take much to spook market participants into hitting the sell button again so we’re going to stay alert here and move back into safety at the first sign of trouble as usual.
With both monetary and emotional capital preserved, let’s get back into some trades and see if these markets can reach a new high on this rebound.
I’ll talk more about this tomorrow, but Happy Chinese New Year!
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