So far my strategy in the stock market has worked if you look at it in a certain light. Worked so far anyway.
As I explained in my July 26 blog, I set 40 percent of my stock investments on the sidelines, anticipating the fallout of an unsatisfactory deficit reduction deal in Congress. I figured I would cut my losses and yet keep several of my strongest bets: Gold, General Electric and Exxon Mobil.
The fallout happened with the August 4 blood-letting on Wall Street when the Dow plunged 514 points. The result was this. While I lost a substantial amount that day, my losses were nothing compared to those major market indexes. I am still in the black for the year, though less than 1 percent. The Dow, Nasdaq and S&P 500 are in the red.
On July 22, the day that House Speaker John Boehner walked out on budget talks with President Obama, I was trailing my benchmark, S&P 500, by 2.8 percent for 2011. Now I am 5.4 percent ahead. That’s a turnaround of 8.2 percent in 10 trading days, all in my favor.
The trick of course is when to get back in the market. If I wait too long the profits will pass me by and I will again play second fiddle to the S&P. For now, I am in no hurry to get back in. I may even draw back some more. I don’t think this wild ride is over yet. Too many uncertainties here and abroad.