November 03, 2022

The DC Today - Thursday November 3, 2022

13 minutes

MARKET ACTION

Dow: -146 points (-0.46%)

S&P: -1.06%

Nasdaq: -1.73%

10-Year Treasury Yield: 4.15% (+9 basis points)

Top-performing sector: Energy (+2.04 xxx%)

Bottom-performing sector: Technology (-3.00%) and Communication Services -2.83%

WTI Crude Oil: $87.95/barrel (-2.29%)

Key Economic Point of the Day:

1.485 million continuing claims (up 47k, most since March)

ISM Services came in at 54.4 – still expansionary but a point lower than expected, and with New Orders dropping 4 points

ASK DAVID

“I enjoy listening to your podcasts – thank you for the insights!

I am sitting on cash – about 75% of my investable assets. What would be a good philosophy of when to get back into the market and how? I am a believer in dividend based investing.”

~ Adrian

One first has to start with the basic principles – not getting invested in a dividend equity portfolio with cash is a riskier than getting invested in one. The reason not to invest immediately is either (a) A belief about market timing that is not grounded in reality, or (b) A desire to not invest all at once at an inopportune time (that being revealed to you in hindsight, not in advance). I reject reason A and am sympathetic to reason B, as long as one does the needed self-assessment to see that reason B is psychological and emotional, not financial or rational.

So then if the desire to mitigate timing risk is psychologically helpful, I advise deploying no less than 50% at once, and then the rest either over a period of time periodically (say, 1/10th of the remainder each month for ten months), or tactically (each “bad” down day in markets deploying more).

I have no statistical or empirical argument for one over the other as it pertains to how to deploy the second 50%, but feel strongly about getting 50% of uninvested cash at once.

Links mentioned in this episode:

DividendCafe.com

TheBahnsenGroup.com

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By The Bahnsen Group

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