Posted At : August 18, 2009 2:37 PM
The market continues to rise, climbing a wall of worry and leaving. Although the longer term picture is very scary, the current “Hope” rally looks to have some more legs. Not until more people become believers, throw in the towel and get back in, will the rally be over. However, the current rally is still considered as taking place within the context of a longer term bear market. At this point, investors must consider the risks. What is the upside potential vs. the downside risk? I believe it is far outweighed to the negative. But, we all possess that greed factor to capture that last nickel, as well as an overstated confidence in ourselves to know when to get out.
This is just a bear market rally and should be treated as such. When this markets turns it will turn fast and leave the majority of investors’ in pain. Everybody thinks that they will know when to get out…but they won’t. Our strategy of investing in real returns through high yields on stocks and corporate bonds, often exceeding 10%, and tax-free bonds where necessary. I am very proud to say we had a great year last year and are also having a great year this year.