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Lindsey Report July


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In June, the S&P 500 set several, new high-water-marks, and today (July 3rd), the Dow Jones Average eclipsed 17,000 for the first time ever (Reuters).  While these are certainly exciting developments for investors, it is natural to have some reservations as well.  As this year has progressed, I am increasingly being asked (paraphrasing): are equities too high, can equities move higher and when will equities pullback?

Having used my crystal ball, here are my most “clairvoyant” opinions. 1) Equities are high, but not exorbitantly priced. 2) Equities can always move higher, just like they can move lower.  3) I’m confident that we will experience pullback(s) in the future, just as I am confident that these highs will someday be eclipsed by new highs, and so on, and so on…. Where my crystal ball is completely muddy, is answering the million-dollar-question, when?  I wish I knew.

Nonetheless, whether one thinks that the markets are too high or not high enough, the situation remains that the S&P 500, the Dow and various other indexes are at or near their all-time-highs (Reuters).  While it is easy to view these levels with unease and concern, an alternative view is to see the situation, as abound with opportunities.

A potential opportunity is to re-balancing a portfolio.  For example, assume an investor targeted having 60% in equities, but that has now grown to 70%.  To re-balance, they would take 10% out of equities and redistribute them to the areas that have relatively underperformed: thus “re-balancing” the portfolio: otherwise known as “selling high and buying low”! 

This could also be a great time to take a Required Minimum Distribution: take the money at a high-point!  Use this as an opportunity to replenish or build up cash reserves!  Maybe one was planning a withdrawal for a vacation, a new car, a gift to kids, etc….  It might be as simple as wanting to make a frivolous purchase: just because!  This is not to suggest that you need to take any action; however, I much prefer the opportunity to do so when my values are high, as opposed to feeling forced to make changes when values are low.

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual.  To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.  The Standard and Poor’s 500 index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. 

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