05/27/2021
The Risk of being out of the Stock Market out weighs the risk of being in the stock market.
After months of positive stock market returns, investors are concerned about a pullback or correction. Equity prices continue near all time highs. Inflation is becoming a risk for the stock market with April data on producer and consumer prices rising at a rapid rate. The consumer Price Index (CPI) added 0.8% in April and 4.2% for the trailing 12 months. No doubt consumers have experienced an increase in prices for energy, fuel and building materials.
We will learn more about interest rates over the next few weeks with the mid-June federal Open Market committee and periodic comments from Fed officials. The economy continues to recover with a decline in jobless filings, improving retail sales and gains in industrial production.
Re-balancing your portfolio is the most effective option to stay invested and relieve anxiety about a sudden drop in equity prices. Periodic re-balancing provides a systemic way of periodically taking profits.
So the conclusion is to maintain your portfolio allocation to a targeted pre-determined equity allocation.
