The market has plenty to worry about – rising interest rates, geo-political volatility, oil prices, power outages and the upcoming elections. Despite all this, over the last 6-12 months, the market has held up well. With S&P 500 and Dow both within 5% of their 52-week highs amidst a sputtering economy and a housing sector collapse, the markets have acted as best as one could have asked for. I am concerned that the recent rally though, is not going to last.
I believe that holding at least 25% and maybe even 50% of your portfolio in cash would be a prudent strategy, at least for the next 4-6 weeks. I believe November will bring about a decent rally once the elections and hurricane season are behind us.
Till then, if you hold equities, I recommend a little more defense. Boeing seems to be a good bet for now. I will write more about Boeing shortly.
– Faisal Laljee