Just Keep Moving Forward

Over the past year and a half it is true that I have made some significant adjustments to my exposure to the stock market. But largely, my philosophy and my strategy have not changed.

Repositioning or reevaluating is not the same thing as changing one's strategy.

My thinking around making this decision largely stems from my belief that the stock market has simply been on a very long bull run, and while the fundamentals still mostly support current price levels for a good many companies in my portfolio—I simply think that a correction is potentially right around the corner.

This belief has been helped by certain economic things now present that were not present when I first made the decision to reposition myself. Inflation is certainly a factor, as well as labor shortages and supply chain issues.

It all just makes it harder for businesses to operate efficiently and profitably. We have seen this with the chip supply issues in the auto industry which has slowed down production, for example.

What I did was to simply reduce my exposure in the stock market from 60% down to 40%. In some cases I sold entire positions. In others I only reduced current positions. But of course, I only sold off stocks that I had made profits on. Most of the cash generated from this repositioning was put into regular savings and bonds which does two things for me.

It still gives me an opportunity to earn at least something on the money, and it is also liquid enough that if the market does take a downward turn, I will have access to plenty of cash to be able to start buying back in after the bottom and be able to make some hefty additional profits on the way back up.

But it is not a change in strategy, as I mentioned. I have not stopped buying more stocks. On top of that, my savings goals have not changed either. I set aside the same exact amount of money each week as I did before I repositioned my portfolio, and I make the exact same weekly contributions of additional money as before to my brokerage accounts.

So, the allocations are still technically 40/60 because the bottom line continues to increase of course.

The thing is, that while I did reposition my portfolio in anticipation of a potential future correction in the markets, I still view the ultimate direction of the markets to be only one direction.

Up.

Because historically that has always been the direction regardless of what else happens in the short term. The stock market does dip from time to time, and certainly major crashes happen.

But after the fact, the market always gains it all back and ends higher than ever before until the next time a correction or crash occurs.

In fact, even though the best time to buy stocks is anytime technically, the most profitable time to buy stocks is after the dust settles from a correction or crash and things stabilize and head back up.

But my main point remains. No change in strategy is necessary. You just keep moving forward regardless of what the market does, and you keep on buying. Repositioning is just something that sort of, for me, streamlines the process a bit, protects certain capital invested, and provides for enough freedom and flexibility to take advantage of future opportunities to their full potential.

In other words, I don't ever want to be in a position where bargains are galore and I don't have any money open to take advantage of them.

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