Three weeks ago we saw some of the markets drop. The Chinese, Emerging Markets and Technology sectors took the biggest knocks, with some funds losing between 10% and 15%. These sectors, along with UK Smaller Companies, have been my favourites over the last year making very nice gains. Now as I had indicated before, I sold half of my holdings at the start of the rout which mitigated most of this loss, fortunately leaving a very substantial profit.
The question is “what do I do next?”
I have been waiting for our numbers and graphs to show which way these sectors are now going to move – so far there are no clues. Small ups and downs with no definitive direction, and definitely no Santa Rally. The whole situation is starting to make the inside of my head itch!
It’s a question of patience and an understanding that you cannot force, or time, the markets. Jesse Livermore said many quotable expressions and here are two;
“The desire for constant action irrespective of underlying conditions is responsible for many losses on Wall Street.”
“What beat me was not having brains enough to stick to my own game – that is, to play the market only when I was satisfied that precedents favoured my play.”
I feel that with Brexit and the EU on this side of the Atlantic and Mr Trump on the other side, good political news is going to be hard to come by. Therefore the market is likely to remain as it is today; like a corpse waiting for an autopsy!
With this and Jesse Livermore`s words in mind, I intend to sell the balance of my holdings in the Chinese, Emerging Markets and Technology sectors. Holding cash whilst things sort themselves out will feel more comfortable.
I need to do this straight away, as I have reached the age where my train of thought often leaves the station without me!