I would encourage everyone to read this article:
The information presented in the article is logical. Quarterly flows into pension funds do have the potential to trigger money flows one way or the other.
Question is what should you now do?
My answer for my own portfolios is “NOTHING”.
Remember that our goal is to make money; but by appropriately assessing risk.
All the fundamental indicators for the stock market are currently negative. Valuations are too high. Earnings are not bright. Many of the technical indicators are positive. Above the 200 day moving average; but seems to be with momentum in only certain sectors…so not a broad based rally.
“Midas” looks at these indicators and perceives a higher risk and has decided to stay away from stocks. In the process it may leave some money on the table; but that is ok.
If there is one lesson that I learnt in all these years is to be committed to a strategy without emotion. “Emotion” fed by news articles are a sure fire way of losing money eventually.
If there is anything that you guys have realized in the last few months; it should be that news does not drive the market we think they do. It is the other way round. The “pundits” look at the market and then write the news articles to explain the market movements.
