2P Man wrote:
I just cashed out my S&P 500 Index fund and transferred the money to a money market fund that averages about 2.2% per year. This rally is not sustainable. The S&P 500 is already above the median end of year target of 2960 and is subject to significant fluctuations from random Trump tweets like we saw in May. Earnings this month are expected to be brutal and will likely be disappointing for the next several months. The FED rate cut has already been factored into the current market price. The bond yield curve has been inverted for awhile now. And the results of tariffs are finally going to start showing themselves. A 5% drop is almost a given between now and Dec 2019. A 10% drop is very possible. I cannot the say the same about even a 3% increase from today's levels. Could be wrong though.
I sold at 2994 and bought back in at 2881 for a "gain" (or avoidance of loss) of about 4%. Then I put in another small bit of money today at 2840 after the markets dropped nearly 3% today. I still have a significant amount of money in cash... I don't think it's likely we'll see the S&P500 go above 3050 by the end of the year, but I do think there's a significant possibility it will drop to 2730 or lower. Slowing growth, drop in interest rates already, TRADE WAR, the unpredictability of Trump tweets, etc, makes for a very uncertain picture. It's ironic our master in chief is obsessed with the stock market yet is setting it (and the US economy) for disaster. Truly bizarre.
My best guess at present for end of year 2019 is 2930-3000, but we'll see. I won't sell again any time soon, nor will I put any more cash in for awhile unless it drops another several percentage points. This is one of the few times I do think a drop of 20% or more has significant (though still low) probability. I will say holding out hoping for a drop of 30+ percent is foolish, or rather, CLEARLY very far from optimal strategy. Hoping for a drop of 50% or more is lunacy.