Zero Stock Exposure? That's a Hugely Risky Bet

The market had a big up day, writes Roger Nusbaum. What's next?

This ties into what I have been talking about for a while as negative sentiment has been building. There is clear visibility for bad things to happen to the market. Visibility does not mean inevitability which is why I have taken no defensive action ahead of what might happen.

I am not that bright, just ask any of my family members and they will tell you. Trying to out maneuver a big turn in the market is not something that is likely to go well. If you invest in the stock market you have to be prepared for down a little. You should be able to tolerate down a little. I have written too many times about utilizing a very simple exit strategy where stocks are concerned and that I do not try to be too nimble.

The market strength today is a surprise. Fortunately for my clients there is no financial consequence to my being surprised. There have been many comments in the last few days from people describing why they are bearish and the action they have taken. The whys center around a laundry list of very scary things. But none of the commenters left an objective market related catalyst for why they took their action. The yield curve is going to invert but it hasn't yet and may not. The economy is going to have a recession but GDP came in today at 3.3%. There is a housing bubble but what if it is just a mania?

If you study market history you will see that the market gives you plenty of time to get out at down a little when truly bad things happen. Zero stock exposure right now seems like a hugely risky bet.

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