March ends with the S&P-500 hovering within 1-2% of the all-time highs earlier this month. Each time we think “That’s it, this pullback will become a big crash”, the market seems to bounce right back. Each high has been higher; each low higher also.
What to do? Stick to the methodology. Allocate the stock portfolio across the various sectors according to relative volatility, and wait for a true change in the character of the market.
I have temporarily dropped GLD (gold), SLV (silver) and the miners from the portfolio until I see some stabilization in this huge drop. I have also dropped bonds almost entirely from the allocations. I am holding TIPs (US Treasury Inflation Protected Securities), while holding my nose.
It seems as if the inflation doomsayers are starting to be vindicated, but the stocks and precious metals are not reacting as I would expect. The stock indexes have continued to levitate, BUT there has been a huge rotation out of the technology and other growth stocks back into “Value” sectors that fell behind in 2020’s rally. It will be interesting to see if the tech stocks get another run, or if the value stocks continue to lead for awhile.
Either way, with volatility staying low, cautious optimism is my stance until I see a lower high and a lower low.
Have a wonderful Easter. Thank God for all of your blessings.