Sunday, April 12, 2015

Waiting for another market week

The earnings season begins tomorrow for public U.S. corporates, big and small.  It's almost as if it promises to be boring, which is not really a good outlook.  The ups and downs of first quarter economic performance ended up being more or less neutral.  Good stock picking and mostly staying put was rewarded modestly and the performance of both stocks and bonds is in the midst of a widespread investor head scratch.

Two examples of the danger of not staying put were certainly not prosperous moves here in recent months.  About six months ago a decision to reduce exposure to Japanese equities by approximately 35% was exactly wrong, perfect bad timing.  Having become worn down by the lagging up and down, never interesting, Japanese equity market, that was a decision based on that country's recent government efforts to stimulate consumer spending, an effort that seemed once again to be doomed to failure.  It's still unclear that it has been effective, but the strength of the dollar and some moves by influential international investment funds looking for stability turned opinion around, irrespective of the outlook here.

The other trade that really gnaws at me was the selling of all shares of a company that has been traded in and out of for at least 20 years. It always seemed as if it was collapsing and it always came back.  Once a reasonably strong company in the 1960's, 70's, and 80's, the word "strong" could not remotely have been applied to it for many years.  It was, however, resilient, no doubt about that for a long time.  The stock was trading just below a dollar a couple of months ago.  Bailout was what now seems like a rash decision.  At this point it looks as if the sale was done at a bottom, and all of the reasons that the stock was traded here for so long turned out to still be true.  That's at least in the short term, but missing out on a significant short term gain is not enjoyable.

It feels like the time to begin paring back stock positions somewhat, but the results of those two decisions makes sitting on my hands seem like the best play.  I'll do something, but I have no idea what at the moment.  Please Mr. Market, no big surprises in the next few weeks.  The mental preparation here is not fine tuned enough, not even close.


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