Buy, Sell or Hold (Follow Up)

Back on October 14, 2014 when the market slipped on the banana peel, I told my readers to "HOLD".  Is the market done slipping on the banana peel yet?  I do not think so and I am still going to HOLD!  Let's talk about why we should continue to hold.

Historically after an election the stock market will dip.  It will take a much deeper dip if there are contested results, run off elections, who controls the House and Senate or if there is a 50/50 split in the Senate between sitting Republicans and Democrats.  And you think Washington is screwed up now?  If the Republicans win the Senate which is predicted we will have a Republican House and Senate and a much hated Democratic President.  It will be constant war between them for the next 2 years and not a dam thing will get done or be accomplished.  This election can play a big role as to how the stock market will be affected.  We have 3 Senate races that are too close to call and very unpredictable (Kentucky, Louisiana, and Georgia).  It was just announced this morning that in Kansas it is getting to be a very tight race too with the Republican in danger of losing his seat.  If this happens this will be the first time since before WWII that a Republican lost a Senate in Kansas seat to another party.  For these election reasons I stand by my recommendation to "HOLD"!

We have also never resolved the issue that the majority of stocks on the market have inflated values that make the market vulnerable for a correction.  I thought that we might be headed that way back in mid October, but 3rd Quarter profits pushed the DOW back up well over 17,000.  Stocks prices went soring and in three weeks my individual stock holdings are up over 5% higher than when they fell in mid October.  I am sure your individual stock holdings did similarly well on this bounce back.  But being that the stock market is even more inflated than it was back in mid October when I first wrote about this subject I am again saying to "HOLD".

One thing that I could see and that I could agree with is taking a little money off the table and saving it for the stock markets rainy day.  You know that day will come.  Here is an example of what I mean and why.  I bought shares of Apple (AAPL) about a month before it's 7 to 1 split.  It was up 25% since my purchase date.  The market took that significant drop in mid October and took me down to like 18%.  Now it bounced back bigger than before and I am up over 35%.  Being up 35% on any individual stock usually translates into a nice healthy profit.  In a situation like this I can see a little sell off and you taking a little money off the table.  Sell 1/3 or 1/2.  Put the money on HOLD for that rainy day.  Use it to revisit in AAPL if it takes a big tumble or reinvest that money into a new stock when the time is right or stick the money in your pocket for a nice vacation...but be prepared to pay taxes on it come the end of the year if you have reportable capital gains.   Otherwise do not make any big moves right now, especially until after this upcoming election.

Gus S.



Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.