The way 2018 ended in the markets with culminating in the Christmas Eve massacre followed by the post-Christmas bounce, it looked like 2019 would be more of the same. Turned out the market continued to bounce high and at one point erased most of the damage of last year. The Chairman of the Federal Reserve tried to calm the markets down with some phrasing that they would be “patient” with going ahead with further interest rates hikes. It seemed to work. The world was collapsing in December and suddenly all was well. It was like The Chairman pulled a Men In Black by taking out a pen, flashing a light and making everyone forget that 2018 happened.
In January the markets continued to bounce. I thought I would be continuing to build up positions with stocks and ETF’s that I have on my wish list, but suddenly nothing seemed worth jumping into. As a result, I made no investment decisions in January. I was happy to stand pat and let things ride a bit. It worked out well. At one point, 23 out of 25 stocks/ETF’s that I owned in a variety of my portfolios were in a positive position, which really surprised me given violent zig-zags we’ve had in stock prices. It turned out the decisions I made to buy some new stocks and ETF’s while the market was falling were quickly bearing fruit.
At the start of the year, I like to review my positions and re-confirm and re-establish my exit strategy. In other words the minimum returns I would be happy with on the good side and the most money I would be comfortable losing on the down side. Setting a firm entry and exit points is a critical component of making thoughtful investment decisions because you are minimizing the level of emotion that plays into the decision making. As I reviewed my positions there was nothing jumping out that made we want buy more shares or sell anything. Expanding this further, when I looked at my wish list of stocks and ETF’s I would like to own, nothing jumped out that made we want to buy in.
It is what it is and if the incentive to do something is not there then there is no reason to do anything.
As I’ve written in the past, doing nothing can be one of the hardest things to do in investing. We’re reactive creatures. Something has to happen or we feel we are not doing it right. So let’s see if this continues.