Managing Market Limbo
Market Talk
This report reflects the Jones observations following several days of market volatility. Nobody can say with certainty how the markets will react in the coming days and weeks. With that in mind, please take these observations as just that—observations rather than predictions.
The tenets here are to try to preserve hard-earned gains and manage a portfolio so it remains open to opportunity. Sometimes that may mean moving more defensively into higher-dividend companies. At other times, it may mean considering some shares of companies that have been beaten down more than their underlying value appears to justify.
The recent rotation out of many technology shares serves as another reminder that portfolio management matters. Trimming an overweight position is not necessarily a negative view of a company. At the same time, watching a stock cascade down ten points in a day is enough to make any investor weary of such whipsaws. Some exclaim, "WTF!" Frankly, who can blame them?
One analyst calls for a 30% correction in technology stocks and, suddenly, many investors head for the exits. Whether that proves to be an overreaction remains to be seen. This observer has cautioned that, although Micron's (MU) earnings roughly doubled, its stock price increased nearly fivefold. Portfolio management becomes increasingly important whenever volatility returns to the technology sector, particularly among semiconductor and memory stocks.
Meanwhile, the recent "From Gold to Diapers" Market Talk theme has been catching investor interest. Gold continues to show legs above $4K. Stocks like KGC and KMB, though in very different sectors, remain stocks to watch.
Holding some shares is one way to stay involved while sector volatility plays out. Holding too many shares, however, can make it feel as though a favorite stock has gone from market limbo into purgatory—and, for investors who became way too bullish in the face of uncertainty, portfolio hell.
Sometimes cash management is the smarter move, at least for a while. Sometimes stocks caught in market limbo need time to prove themselves. Dry powder allows investors to watch patiently and perhaps buy back a stock they once liked, made a nice gain on, and sold—only to watch it keep climbing. Some even skyrocket out of reach.
A good company caught up in sector volatility and whipsawed lower may present an opportunity to buy some shares and see where the story goes from there. At the same time, starting with a small test position may help avoid catching a falling knife, as they say.
Most of us have a story like that. There is no point in belaboring it. Dry powder is not surrender. It is opportunity for the watchful.
As we celebrate the Fourth of July, it is also a time to appreciate America and not take freedom, liberty, and the opportunity for prosperity for granted.
- Jones Report
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More later so ....Stay tuned, if you dare!
For now, we close by noting that any view on the market and stocks on any particular day may change in the days to come. That is why we watch and see how our views match up with reality. Looking ahead a few months may be a way to do things - but thinking too deeply about world events and the recent alliances forming, can make projecting ahead a dicey endeavor.
All in all - we use the word maybe "some", not "too much" and play it accordingly. Never get arrogant in our notions because things do change - and individual stocks are subject to many factors outside our control. So, we try to -stay aware.
With all the above caveats and attempted prognostications, I will close this post. Stay tuned for more opining on the market and stocks to watch.
ALL in my humble opinion, scroll down and read more. This site does NOT make Buy / Sell recommendations.
