Hi Toofuzzy,
I don't have enough spare cash to do a full market down cycle if that is what might happen. Given that I had seen a similar set of curves to the ones that karw referenced when he was suggesting that it might be a good idea to sell any delayed sells we might have, I think that a wait for a week or so might be wise just to see if it is a false signal or the current swings in DOW, etc. are a harbinger of things to come. If nothing else it will allow me to check out a couple of bond funds that a local pension adviser mentioned in his column yesterday. This would also allow for buying in bonds as a starting point. As bonds tend to be less volatile as shown in the chart I posted (#38172) about the 50/50 bond versus all stock that I got from Wells Fargo.
Add in the normal business cycle stuff and Tom's sarcastic comment about not buying $30 stock for $29.95 and I want to see what's up, or down.
If you look back at the last two major down cycles you could see a trend before the major drop off, and they started quite a bit before the big drop. I've seen the same pattern in the Great Depression as well.
This is not forecasting the market, but being aware of gathering clouds and a strengthening breeze as a warning that you might consider furling your sails and battening down the hatches in case it turns into a major storm. Just wise seamanship, IMO.
Best,
Allen
AI
