One of the tricks that you learn in the marketplace over a decade of experience is that you make money by buying when things go lower, and sell when things go higher. It sounds awfully cliche, but doing this correctly is an art and will never be a science – sometimes the markets do something “crazy”, and taking advantage of craziness is how you make a substantial sum of outsized gains – whether it is buying at a crazy low, or selling at a crazy high.
While I would not call present conditions crazy, I do consider them frothy and have been lightening up positions since the beginning of September. Having a high fraction of the portfolio in cash is always boring, but I am fairly firm in my belief that cash will be outperforming most asset classes after the winter is done. There is just not enough reward out there for the risk. I still have enough in the market to participate in further gains and to profit in case if things do become “crazy”.
Until then, I wait. Boring, boring, boring.
Much like poker, knowing how to wait is a virtue. But the difference is that you don’t have interesting characters to watch at the table.
Looking at quotations on Interactive Brokers vaguely reminds me of looking at the computer screen of vertically scrolling green font in “The Matrix”.
[…] Divestor moves further into cash and, like the fox, waits for his opportunities. […]