Our activity as investors is not to try to identify tops and bottoms - it is to constantly align our exposure to risk in proportion to the return that we can expect from that risk, given prevailing evidence.
-- John Hussman

CHARTZ AND TABLE ZUP ON WWW.JOEFACER.COM

Friday I moved a very significant portion of my 401a into the market. I have an overall plan and some criteria by which to decide alternate actions and reactions as circumstances and inclination require.



Coupla things about the table. I'm still 50% bonds/cash. This is NOT the bottom. I'm NOT all in on a secular bull move off the long term bottom. I've spread small amounts of money in every domestic stock fund available except one, VFINX. I'm not in VFINX because I don't like the rapid trading limitations for Vanguard funds. The reason I've used small amounts in a lot of funds is so that I can get back out in 2 days and stay within the rapid trading restrictions of all the funds. The reason I'm in every domestic fund including RWMFX, which I think is a real dawg, is that,

1) I want maximum exposure to the market without running afoul of the rapid trading restrictions and I'll take the added exposure in a dawggy fund, accepting lower returns for the ability to get out cleanly if it doesn't go the way I expect.

2) I believe the risks are too great in the foreign stock fund.


Here's a quick rundown of Three possibilities at play here;

1) We've got an oversold bounce. We've had a buncha days down in a row. Everyone who had the inclination and means to sell, did so. They got so far out there, that they got nervous and have stopped selling and covered their shorts or had nothing left to sell into short covering or the everyday buying that started the move up. If that is so, the move up is over/will be over within a day or two and I'll bail out and go back to cash for a small loss.

2) We've got a Bear market rally workin'. The bottom is STILL NOT IN. But we'll see a sustained upward move similar to the sustained downward move we just had, but taking us only part of the way back up. It'll be quick and vicious, and it'll end when we reach a technical resistance level, or we get a news item that affects investor psychology, or when fear and exhaustion overcomes greed. Rather than having the rug pulled out from under me immediately, as per #1 above, it'll happen later when I'm feeling good about finely making a dollar in stocks in the 401a. Between recognizing it's time to sell and actually getting out, I'll probably lose some money. That's how it works. and if it works out well I might make a coupla dollars and keep some of it too. Works fer me,Tweety bird.

3) I'm totally wrong and we start a new bull market and I never get my sell signal and I'm forced to go all in on stocks and make a lotta money being long stocks. That works for me too. But I don't see it.....

What I intend to try is not without risk. Then again, neither is buying, holding and not looking at my 401a but once a year. A day will come when the coast is clear to load up on stocks and stay that way. I just don't know when that'll be.....

Know What I Mean, Vern?

Stay Tooned....

http://www.ritholtz.com/blog/2009/03/fr ... 0-billion/
http://www.msnbc.msn.com/id/29708346/
http://www.ritholtz.com/blog/2009/03/ne ... -insurers/
http://www.bloomberg.com/apps/news?pid= ... refer=home
http://www.ritholtz.com/blog/2009/03/st ... tle-banks/
http://www.bloomberg.com/apps/news?pid= ... refer=home
http://www.ritholtz.com/blog/2009/03/ha ... ottom-yet/
http://www.nytimes.com/2009/03/14/busin ... .html?_r=1
http://www.bloomberg.com/apps/news?pid= ... refer=home

WEDNESDAY



NOT HALF SHABBY

I've been allocated away from stocks for a long time. This week's reallocation is a huge change for me. I'm fairly confident that there has been "A" turn in the markets, but not necessarily "THE" turn. So I'm self directing my 401a as was intended to increase my exposure to stocks when the risk /reward is more favorable. Fifteen months ago the SPX was at 1500, with the risk/reward being some measure of appreciation upward as the reward and 100% down being the risk. Last week the risk down was still 100%.... but from 50+% down compared to 15 months ago... If you don't believe that the market can go to zero, ya gotta think that the risk/reward here is fairly righteous in your favor, especially compared to 2007.

Now I've gotta keep concentrating on avoiding losses and add working on making gains to the mix.

HOWEVER...

I posted the above after lookin' at charts. After catching up on my readin', it is clear that the FED did something very very good or very very bad today. There is emotion, incredulity, and anger everywhere and EVERYONE has an opinion. I'm workin' on mine. Rhere is NO DOUBT that this will affect the market big time. It's the direction that is so hard to figure out....Stay Tooned...