Ahhh, the year that was 2013. The S&P 500 made people small fortunes, rising nearly 30%. Our performance was noteworthy as well. We got a 34% return, easily outperforming the S&P 500. So, did it carry over into 2014? To the untrained eye, no it didn’t. The Dow Jones sank more than 100 points out of the gate. However, seeing the markets sell-off to start the year doesn’t rattle me. In fact, I think it’s healthy- we needed a pullback. Since we took gains at the end of last year and are now in 58% cash, we are letting this market come in.
Let’s be clear; I am not calling a direction for stocks in 2014 because I don’t time the markets. (That’s how you get hurt. If I had to, I’d say markets climb at least 10% by the end of year as the recovery in the U.S. and abroad is still underway. But don’t hold me to it. ) As you know, I am just sticking to a 50:50 (stock to cash ratio) portfolio strategy and will buy the dips on the way down with my high cash position (58% at the moment). So, whatever the market does is meaningless to me. I don’t care which direction it goes. Everyday is a win-win. If we go up, I win because I own UPRO and stand to benefit from its beta. If we go down, I win because I’m in more than half cash and get to buy value on the dip. Have a great 2014 everyone!
Portfolio strategy changes into 2014: None. Continue to buy the dips and use UPRO as my preferred investing vehicle (a leveraged S&P 500 ETF) while continuing to look for select stocks along the way in a more expensive 2014 market. I’ll keep you posted for those!