Behavior of the American individual investor has become an integral part of my market observations. We keep seeing reports that consumer sentiment is becoming more positive; however there is still more cash on the sidelines than stock ownership. Portfolio management discipline dictates that with this level of positive consumer environment, which has persisted since February 6, playing a little defense here should be implemented. Cash positions will rise based on some profit taking which is ongoing until we either see sentiment retract or bond yields rise as bonds are sold and equities are purchased.
What we need is a market correction; otherwise the current bull market will become more dysfunctional due to the narrow participation of buyers. The market is still undervalued and the Fed’s relentless printing of money to fuel the bull will continue but buyers support may dampen the upside movement while entry points are formed. My point is that a little correction here should result in higher prices later.
My thanks to all of you that attended our workshops last week on Conscious Investing. I appreciate the support and we are already working on another one.