The dow Jones ended the week up 2% to hit new all time highs, and the transportation followed suit but not to all-time highs, as they had sold off the week prior ahead of the Dow. The current set-up isn't calling for a correction, but again, we'll need to wait it out another week.
The gold market is capitulating like CRAZY. I've mentioned that the GDX was a great buy last year when the Gold space showed some serious weakness. Well, now it's an iNsAnELy good buy as a value play ... and there may be more downside to come. I averaged down on my position this past week.
The S&P 500 inverse play is obviously not panning out as expected yet - but was still worth the minimal investment to gain the courage to go long the market knowing I'd be protected in the case of a correction.
The thing to remember that a small percent gain on a large sum of money invested conservatively (i.e the gain from going long the market this past month) can be worth about the same in terms of the amount of money gained vs a large percent gain on a small amount of money invested in riskier assets.
This is how it is with small-cap stock picking or indexing. You can get gains of 40-50% on this part of your portfolio (which should not make up more than 10% of your assets) to make the same amount of money that you would on a 10% gain on the core 50-90% of your portfolio. It's prudent to invest more in conservative stock choices, and use small caps as a kicker. until you have enough capital to make investing in small cap stocks worth the pay-off.
Here's an example:
Let's say your have $20,000 to invest.
A 50% gain on the $2,000 investment in a small cap index would give you a $1,000 absolute gain.
A 5.5% gain on an $18,000 more conservative investment of dividend paying stocks (70%), bonds (20%) and gold (10%) gives you the close to the same $1,000 return for much less risk.
Combined together, your overall return in this scenario would be a respectable 10%, but your risk profile would still be fairly conservative since the bulk of your investments are in more conservative options.
This is, of course not reproducible, but is just an illustration to show that it's the amount of money you are gaining from your investments which counts - chasing % gains can become a fool's errand, so it might be better to simply focus on your asset allocation and rebalancing your asset mix when appropriate.
