Market Timing - January Tug of War Edition
I will use this blog entry as a holding place for my tax-deferred market timing trades for January. I sold out of my large cap value fund on Tuesday 1/3 and captured a nice 1.6% bump. Markets were flat yesterday and today so I haven't really captured any notable performance gains or lost anything against the broader indexes.
I'm still staying on the sidelines in cash for a couple days. I realize that unemployment claims has the chance to push the market higher on Friday 1/6, but I also see some red flags out of Europe with Hungary's poor bond auction and Italian bond yields back over 7%. I think if Europe gets jumpy the dollar will soar even faster and domestic equity markets will take it on the chin. At this point I actually want the European markets to tank so that the ECB, Germany, France and others will enact real policy responses.
For the first time in my life, I am taking an increasing position in the silver miners to hedge against a weak dollar. Each day I realize that there is a tug of war going on between a stronger dollar relative to the Euro and a print happy fed. I think the print happy fed will keep inflation moving higher in the next 6-12 months. In the short run (1-3 months) while Europe tanks, I am happy to pick up more shares of the miners at bargain basement prices.