Did the markets report a sell-off during your holiday?

Over the weekend I got from one of our members the following message:

“Been on holiday for a week, should I still sell off my holdings?”

Here is my reply that I sent last weekend. Maybe it is of any use to you.

Hi <member>,

Exact timing when to sell now is difficult.

Since there was such a sell-off in the market last week, my personal approach would not be to sell everything now in one go.

Maybe the market falls further or maybe it first will correct again. Who knows? It depends of course also on in which markets you have invested.
If I would be standing in your shoes, I would decide what part of my holdings I like to sell this month and then sell a part of this defined part of the holdings now the coming week and then sell the remaining part of the defined part two weeks later (let me know if it is not clear what I have written here).

Personally I have sold halve of my China related holdings last month and the rest last week. For Europe, I sold all my holdings at the beginning of last week except for some click-funds that I own already a long time and that have limited downwards risk.

For the US, I sold halve of my holdings at the beginning of last week.
The rest I will keep in any case till I see the trend update at the beginning of September. The same is valid for the rest of my Asian funds.

Only in a few months we will get confirmation from the markers if this was just a temporary correction or the beginning of a bear market. At this moment I count on the latter.

I hope that my thoughts above are of use to you to decide what to do.

Kind regards.

Van Beek

Tweets

Follow me on Twitter: @trendinvesting

Here are some thoughts that I have tweeted earlier:

“Do not confuse simultaneous events with causal events. Equity markets do not care about S&P downgrade. It is the economy stupid.”

“Here is the positive market outlook: the stock markets will bounce back... eventually.”

“This is the time for China to use its reserves to buy hard western assets.”

Economy

To get a better understanding what is happening in the economy at this moment, read these recent articles:

Thomas Friedman in the New York Times

Harvard economist Kenneth Rogoff

This excellent book "The holy grail of macro economics" describes how Japan was facing similar problems as the US and Europe in their decade of stagnation.

KOSPI

The enormous decline in the South Korean KOSPI of the last 2 weeks is a clear example that you cannot look an individual index to get a good indication of the long-term trend direction.

Most markets world-wide move in sync. If you would have looked just at the KOSPI, it would have looked great. But the warning signals of the rest of the world would have made you very cautious.

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