"In times like this, take a profit, pay the tax and be grateful" by: John Sample

.    Almost daily I have a friend ask my opinion of what will happen with the stock market. 
   They are asking if they should sell and get out, as little appears to look positive. 
   You only have to look at the daily briefings about the rise in Covid-19 cases as states reopen. 
   The second wave is predicted to be worse than the first. Why would stocks continue to rise? 
   Doesn’t it make sense to take profits and move to cash? 
   In each and every case, I always advise to take a profit. It never is a real profit until you sell. 
   The other alternative is to wait for the next pullback to get value.
    Another good idea should it happen.
   The real answer is that the market doesn’t pay attention to what happened and is focusing nine months out. 
   The thought being that there will be vaccines that will allow people to return to some sense of normalcy. 
   I feel that will happen, but we have to get between now and then. 
   During that space it seems reasonable these indexes and averages will fluctuate and probably to a significant extent. 
   It will be volatile and a trader’s market. Recession concerns are overblown, in my opinion. 
   The first and second quarter will show negative GDP, but the third quarter will move to positive and could be stronger than the fourth quarter. 
   While that is a better ending to the year than the beginning, it is still a recovery from a government-induced recession. 
   For a value investor like myself, this is when I look for companies with strong balance sheets, positive cash flow and a record of increasing dividends. 
   You might investigate any myriad of debt offerings companies are undertaking to get them two years’ worth of coverage. 
   These offerings come from solid companies and pay more than your local bank will pay on your cash. 
   It is a means to diversify your portfolio with at least 40% in bonds. Always understand however that it is great to get a higher return today, but should interest rates go up the principle value of your debt issue will drop. 
   The answer is to hold to maturity. 
   There is no easy and certain solution to investing your savings. 
Safety is in cash. For higher yields, go to bonds or dividends.
   There is always the potential for principle loss.
   This is why I am a value investor. I get my chances like March and I act. Then I just sit on my investments drawing income.
   It is not exciting but it does pay my bills and supports my lifestyle. 
   I do trade and account but that is more for fun and it wouldn’t pay for my green fee. 
   I would suggest though that one can monitor these markets and you will find solid companies that pay dividends and should increase in value over the long term. 
   That is what investing is about. You take a long term view of growing your net worth. 

 

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