We are entering interesting market developments. What are they?
1. One of the few market certainties is that it reverts to the mean. When asked what the market will do, J. P. Morgan who dominated Wall Street at the end of the 19th and the beginning of the 20th century said: “It will fluctuate.”
We have recently entered the longest bull market in history. It will revert.
2. Another of the few market (near) certainties is that an inverted yield curve forecasts a market drop. We have recently entered an inverted yield curve. The market will drop.
3. An escalation of trade tensions between the US and China will certainly result in a market pullback.
Of course, we don’t know when the market reversal will take place. The chart below shows that last week, there was a drop of nearly 5%, which is a good time to rebalance our portfolios.
But not yet! Just be ready.
Our members don’t need to care about market drops if we are positioned in line with the Monday Morning Millionaire Program philosophy.
1. We have a market/cash (or near cash) asset allocation position which is appropriate for our age and risk tolerance.
My personal asset/allocation is 50% exchange-traded fund(ETF)/50% Money Market.
2. The market part of our asset allocation is an ETF which parallels the S&P 500. SPY, VOO, IVV or RSP are suitable. There are thousands of other ETFs. We can ignore them.
3. We keep our powder dry by keeping our cash in a money market fund. TDB166 pays the most. (A little over 2%)
The Monday Morning Millionaire Program philosophy allows us to buy bargains when the market drops and to take profits when it rises. Markets down or markets up, either way, we take profitable action. And we sleep well.