Still hesitant to invest

[mtbc]

While I remain ready to buy if stock prices much fall, I have been surprised by their robustness in the face of the increasingly obviously out-of-control pandemic causing such illness, lockdowns and general economic distress. If a market correction is warranted, it looks to be neither as soon nor as sharp as I had expected. It may be that the S&P 500 will benefit from a combination of the Federal Reserve continuing to buy bonds, economic stimulus from a new Congressional session, and persistently low interest rates.

Therefore I suspect that there will not soon be a large dip for me to buy into and, otherwise, I am leery enough of what this quarter may bring to prefer to stay wholly cashed out of US stocks. Historically I have favored large cap but, in considering what might work out best given what I expect may come to pass, in the next quarter I am most inclined to shift strategy toward buying some smaller cap value stocks in sectors like construction, technology and healthcare.

Comments

[mtbc]

I believe your father! Indeed, a few of my wise friends are currently relying on money market accounts. Judging by some of the investment reasoning I see written and how many actively managed funds don't do well, I think that many (most?) professional investors don't really understand it either and a lot of the amateurs who made money lately simply benefited from a general upward trend and may now be overconfident. Few people manage to do much better than just buying a good range of instruments then holding them. I remain amused by the quant joke, Strong support at $0.

A couple of jobs ago I was paid to work on a couple of pieces of software to aid investment decisions and I can't help but be interested because there is some related stuff remaining that I hope to get around to finishing the investigation on. But, so far, when I have my own investment ideas, I try them out on paper on historical data, none of them beat the market consistently.

I suspect that economists are correct. I expect that Biden will win, the government will keep pumping more money into the economy for a good while yet, and international trade relations will improve. What makes me most leery is that the current prices of many well-known stocks are not at all justified by those companies' balance sheets: there is lot more looks good for the future baked into the S&P500 than I am comfortable to join the herd on, especially given that the only guarantee for the future tends to be, it'll include surprises.