Pullback from the market

It's always a difficult stance to take, whether one should pullback from the market. After all, after the drop in the first quarter of 2013 and subsequent drive up of the market by the end of the year, one could easily say how smart they were for staying in the market, or during a down market how smart they were to be out of the market.
I'll be honest when I say that I was about 95% invested in the market during most of 2013, although 7%-8% of the 95% was in bond funds through my 401k at work. After increasing my overall portfolio by 39% in 2013 I have decided to cut back my involvement in the market to about 70% for up to the first quarter and will reassess after some earnings come in. Luckily for me (and yes I consider this pullback luck), I shifted back just prior to the drop since I moved some funds back into a high yield fund on Dec 31st that achieved 6.81% for last year by the end of the year.
I did this primarily because I believe that people were kind of hyped up toward the end of the year and perhaps the "sugar rush" started to wear off. I want to see that the companies are still generating value for their stockholders.
For 2014, I plan on examining more healthcare related companies since Obamacare will be more fully implemented by this year. I also intend to work with options a little since I have never worked with them in the past. Dividend stocks have worked out well for me thus far, and I’m still holding onto several companies including RTN, SDRL, and AGNC. Their dividends are pretty nice overall especially since they're trading lower as of the end of last year.

  • AGNC has a ROI of 13.27% if the dividend remains at 65¢/share @ $19.59
  • SDRL has a ROI of 9.4% ROI if dividend stays at 95¢/share @ $40.39
  • RTN represents a rather small 2.48% ROI at 55¢/share @ 88.82, but I had purchased it when I believe it would be considerably lower than it was worth due to many recent government contracts being awarded to them … I am currently up over 15% on the shares I own.

I am considering purchasing some long term (i.e. 1 year or more) options on RTN since I believe they are a valid competitor to Lockheed Martin (LMT) and Northrup Grumman Corp (NOC).

My goals for my portfolio this year are an increase in the total portfolio by another 48% through deposits made by myself and my employer and growth. I'm setting a personal goal of 25% gain in my portfolio for 2014, which I have been successful at achieving for the past 3 years. I wish readers that same returns for their own portfolios! :-)
Always remember that the first step is to put away as much as you can, and even stretch your savings goals beyond where you believe they seem to be limited to. After all, what can you loose by saving more money?

This entry was posted in 401k, Goals, Growth, IRA, Retirement Savings, Roth IRA and tagged , , , , , . Bookmark the permalink.

One Response to Pullback from the market

  1. Minor update to this … after looking at my portfolio and what is in cash or equivalents, I’m actually only 62% in the market due to additional funds (most of which I initially deposit to a high yield bond fund which averaged 3.81% last year).

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