Investment Alert 11/17/2011

As we head into the holiday week I wanted to send out this quick note in an attempt to head off some post turkey indigestion.

All of our Seasonal Growth accounts, and 401(k)’s have been in cash, money markets, and/or bond funds for some time now. Today we are also selling our holdings in JNK and HYG. These are high yield bond index ETF’s that we hold to add dividends to our income portfolios. Simply put, credit spreads, the difference between interest rates for high quality and low quality bonds is widening. This shows that the bond market is much more worried about the economy than the stock market. But most times the stock market will follow these yield spread differences. In this case that would mean a lower stock market.

This means that even our conservative Dividend Value strategies have approximately 25% cash position. This is about as conservative as we get.

While no one should ever take broad based investment advice and assume it applies to their portfolio or strategy, it is my opinion that it is foolish to stay fully invested in the market. On Wednesday before Thanksgiving, the Debt Super Committee will announce how they will cut $41.5 trillion from government spending. There is no possible good outcome from this. Making the cuts means a drag on the near term economy. Not making the cuts means a drag on our future economy as we pay back the debt. Raising cash now, just gives us the opportunity to have one less thing to worry about when we should be enjoying the day with our families and loved ones.

Personally, I’m off to Annapolis MD for a weekend lacrosse tournament with my son, and then down to Kiawah Island SC where we will enjoy our Thanksgiving with my daughter. I’ll be back in the office on the 28th if you would like to call and discuss your investments.

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1 Response to “Investment Alert 11/17/2011”


  1. 1 Nick November 23, 2011 at 9:32 pm

    If the economy holds up then high yield bonds should do well also. If not then watch out below.


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bill@401advisor.com • 937.434.1790

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Charles H. Dow Award Winner 2008. The papers honored with this award have represented the richness and depth of technical analysis.

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