At the moment the correction might be over, as the market seems to be getting past the European crisis and many have a “glass half full” belief in the economy. Things should do pretty well for the immediate future…at least until something makes it stumble. That stumble could very well come from the next GDP figures that will be announced at the end of July. If those numbers are good and people are spending again, we are in for a new multi-year bull market. If, on the other hand, the numbers come in lower than expected (as I predict), this rally could come to a screeching halt.
Naturally nobody knows for sure, so I remain open-minded and ready to participate if things are good or if we need to get defensive. A good way to play this may be to participate until we get close to the GDP release date. At that point either raise some cash or place some hedges on your portfolio and try to make it somewhat market-neutral. Because our goal is typically to get 70-80% of the upside of the market with only 30-40% of the risk, we are happy to take that approach. If it turns out better than expected, you might miss out on a little bit of the rise before you get back in or take off the hedges. However, if things turn ugly you’d be protecting yourself from an absolute catastrophe.
Regards – Keith Springer
Springer Financial Advisors
1383 Garden Hwy, Suite 200