Well, the fear Friday and today is as great as the greed has been during December and January. Stocks are getting killed today. Gold and Bonds are up, which is a very helpful thing for our portfolios.
As of the end of last week, our methodology called for an increase in gold (the intermediate trend is up again) and a reduction in stocks. Accordingly, this morning before the huge selloff, we sold a lot of stocks and bought gold and bonds.
I also made the decision to replace US Long Term Treasuries (TLT etf) with US Inflation-Protected Securities (TIP). Since TIP is much less volatile than TLT, our methodology calls for a larger TIP position than we had in TLT, thus reducing the stock positions even more. Thankfully, this move has proven very timely.
As I sat down to write this blog post, the Dow and the S&P 500 had given up all of their gains for 2018. Wow.
It was uncomfortable watching stocks go straight up when we were widely diversified in other asset classes. Now, it feels pretty good.
Have a great week.