I’m Buying Stocks – Cautiously

February 6, 2011 by Jeremiah | 0 comments

If you are old enough to remember the market in 1999 and also in 1987, you remember that the market went into the tank. It was not a good time to be in stocks. It was a time to stand aside and wait for the dust to settle. The dust settled, but I went to the cleaners in 1987 and vowed that it would not happen again.

In 1999, when the market went south, really deep-south, I was in cash. I am in cash right now for all of my 401k assets. All of my Roth IRA money is in high yield bond funds. But I am as nervous as a cat on a hot tin roof. Everything I see says that we are in for a correction, but still the market moves upward.

So I am buying small positions of common stock. Small lots are easily traded and do not have any effect in the market on the buy side or the sell side. I am hoping to get a bump on the stocks that will boost my high yield bond fund rates, enough that it will give me close to 12% that I need in a bad market.

So what has me spooked? The yield on the 30-year Treasuries hit 4.64% on Thursday, February 3rd. The 30-year Treasuries were at 4.39% back on the 3rd of January. I think that the stock market correction will occur around the time when the 30-year Treasuries cross 5.0%. The 5.0% rate correlates to the rates of the 30-year Treasuries market, with inflation, back in 1987 and 1999.

I finally ran my numbers for last year and did really well, considering the general market. My portfolio increased 24% over the previous year. I’ll take that. It would be nice if I could take some of that out of my plans without penalty, but I have a few more years to go for that to happen. I am bracing myself for a weak market this year and hoping for 12%. I am up 3% so far after the first month.

We’ll have to see if I am correct about the 30-year Treasuries.
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For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!