ETF/No Load Fund Investing: Are There Valid Reasons To Sell Now?

Ulli Uncategorized 2 Comments

Reader Nitin sent me an article from BusinessWeek called “Five Reasons to Sell, Sell, Sell.

It lists five of the biggest threats to the current stock market rally, which include:



1. Earnings

2. Consumer spending

3. Inflation

4. Subprime and housing

5. Shiny happy investors

All of these are items which I’ve discussed in various posts and comments, and every one them has the ability to derail the current bull market. Some have actually contributed to last week’s sharp pullback. If you are a casual reader of these types of articles, you may be prompted to liquidate your entire portfolio, and possibly watch the major indexes resume their upward march for another 6 months.

And that is the problem with these stories. They may be correct in outlining all of the culprits that will always affect markets to the downside, but that does not mean such an event is imminent.

This is why I continuously harp on the fact that these stories have no value when it comes to actually making a decision regarding your investments. At the risk of sounding like a used car salesman (no offense), stick to watching the major trend and follow your trailing sell stop points. Those are real numbers you can use to improve your decision making process.

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Comments 2

  1. Ulli,

    I agree that the most useless exercise in investing is listening and watching the financial news either written or video. It is very difficult to act appropriately on a move in the short term that will end up being a correct long term move to protect the gains in your/my portfolio. My single security stops have taken me to a 20% invested position, and after today it will be approacing 15%. This has taken place since October of 2006, and the mistake I have made is reinvesting over the last 6 months instead of staying out of the markets completely after taking my gains and stop losses. I have a portfolio of funds that remains invested after your last call, and your method will prove to have not only protected my profits , but also, with much less risk. I doubt I will ever buy a stock after this move is completed using your guidence and funds.

    Thanks for your for the work you have done and continue to do,

    Ray

  2. I just want to say one thing about earnings. According to Standard & Poor’s senior index analyst Howard Silverblatt, ’06 share buybacks boosted year-over-year earnings per share growth by four or more percentage points at nearly a quarter of the companies in the S&P; 500. And share buybacks are moving ahead full steam in the corporate world. When a company buys back stock, and subsequently boosts earnings, it does so without producing any more widgets, or selling any more widgets. Wouldn’t you like to know what the last 18 months (6 quarters) worth of earnings would look like without stock buybacks? You know, when companies have to show all their earnings growth by actually making and selling things. I would. Investors need to be careful to avoid mistaking earnings-per-share growth from buybacks for actual earnings growth. When buybacks slow, as they inevitably will, what’s left of earnings per share could be a big disappointment.

    G.H.

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ETF/No Load Fund Investing: Are There Valid Reasons To Sell Now?

Ulli Uncategorized Contact

Reader Nitin sent me an article from BusinessWeek called “Five Reasons to Sell, Sell, Sell.”

It lists five of the biggest threats to the current stock market rally, which include:

1. Earnings

2. Consumer spending

3. Inflation

4. Subprime and housing

5. Shiny happy investors

All of these are items which I’ve discussed in various posts and comments, and every one them has the ability to derail the current bull market. Some have actually contributed to last week’s sharp pullback. If you are a casual reader of these types of articles, you may be prompted to liquidate your entire portfolio, and possibly watch the major indexes resume their upward march for another 6 months.

And that is the problem with these stories. They may be correct in outlining all of the culprits that will always affect markets to the downside, but that does not mean such an event is imminent.

This is why I continuously harp on the fact that these stories have no value when it comes to actually making a decision regarding your investments. At the risk of sounding like a used car salesman (no offense), stick to watching the major trend and follow your trailing sell stop points. Those are real numbers you can use to improve your decision making process.

Contact Ulli

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