So far in 2012 markets have moved our way but from looking at the sentiment data we could use a break as investors appear to be quite aggressive. Back in late 2011 the idea of a rally seemed inconceivable but then rallies are born out of investor fear and angst.
This week we have stared to raise some cash in equity accounts by culling our laggards while allowing our best performers to remain intact. Our accounts have risen to low double digit returns so far for 2012, I don’t feel the need to force the issue by remaining fully invested. This is a small step in the direction of caution but since we do not have a sell signal yet, any hedging could be premature. Both long term and intermediate indicators are still bullish for equities, however our bond model has gone neutral.
The Greek debacle is likely to be a short lived issue as the markets have been dealing with this for many months. The larger forthcoming issue could be a war with Iran.
Be careful out there