The Ignorant Investor

Checking in on my list of sector ETFs, I see that most of the same sectors that led in 2005 are back in the lead this year. Gold and precious metals, oil, REITs, and small caps.

The explanations on the net are endless- but there's no consensus. Bears continue to wait for the other paw to drop. The retail investors continue to scoff at pessimism and follow the leaders. Institutional investors scratch their heads and then shrug as they climb aboard the gravy train.

I missed the boat on precious metals and REITs, and I locked in profits on a sizable chunk of equities recently. Some of the profits got plowed back into the S&P 500, but a large chunk of it went into a money market. So if you want to experience the feeling of being me, all you have to do is walk over to the nearest wall and repeatedly pound your head against it.

This is the difficult part of going against the herd. There's always going to be a period when you just don't know whether you are right and all the jovial people who are making a killing are wrong. So easy to give into frustration and despair.

So I'm sticking with my view: asset prices are currently irrational, so keep a big position in cash as I wait for prices to fall.