Just a few links this week due to “events dear boy, events”. Specifically, I’m doubled up in bed with back pain and have just managed to get up long enough to add FT links to this article I wrote yesterday night, and to hit publish!
What a week! I assumed that by today I’d be sharing where I’d decided to deploy the cash I liberated by selling some shares a month or so ago [1].
As it’s turned out, I’ve been putting it back into the market!
Okay, not all of it. But with the markets plunging on Greek fears [2] and the UK in political deadlock [3], I couldn’t resist buying Lloyds, for instance. (I’ll post why next week).
I’ve also rejigged some ISA holdings, swapping illiquid [4] small caps that had held their value for much-reduced blue chips with diversified global earnings. At some point, I expect to swap back – either because the small caps I sold eventually fall too, or because the blue chips rally.
Note: Most of my portfolio has and will remain untouched. This includes my long-term Legal and General trackers, which I only rebalance occasionally.
A reader asked me yesterday why I warn against trading and market timing, given that I cashed in nearly a quarter of my portfolio five or six weeks ago, pretty much hitting the recent high. She also cited my article on the day of last year’s March lows [5] (not surprising she’d seen it, given how often I link to it! 😉 ).
There are a number of reasons.
Firstly, my recent sale before the fall was sheer luck. I believe most short-term moves are luck.
I’m no genius, let’s be clear. It’s one thing to add to or trim back a trading portfolio [6], according to how expensive particular holdings are looking, or to seek diversification. But going wholly in and out of cash is very different, and I am certain it would lose me money over the long-term as I failed to capture enough of the advances.
Secondly, as a blogger I’m now giving my views every week. Some are bound to be right!
If shares hadn’t rallied last March, I’d probably have thought they were even cheaper in April – and I would have said so. Eventually I’d be right.
Don’t get me wrong – I write my posts honestly, thoughtfully, and with the best of intentions.
But I’d suggest you beware of me or anyone else claiming to consistently call the top and bottom of markets. Do it six or seven times in a row starting with just £25,000 and you’d probably be a millionaire.
I’ve never heard of anyone who made a million [7] that way. I doubt I ever will.
Guaranteed election-free blog posts
- Successful trading techniques – Oblivious Investor [8]
- Dow Jones Crash: Trader error? – The Digerati Life [9]
- Australian property market in May 2010 – Retirement Investing Today [10]
- Am I foolish for saving so much? – Get Rich Slowly [11]
- Everything you know is wrong – The Kirk Report [12]
- Pretend you have arrived – Financial Samurai [13]
Other financial articles
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