FMD Capital Management

How to Play It Conservative With the Market at New Highs

Written by David Fabian, February 25th, 2014

Last week I wrote an article that focused on how too much cash was hurting your returns as stocks, bonds, and even commodities have strengthened considerably this year. Subsequently, we have seen further reinforcement in the SPDR S&P 500 ETF (SPY) which ultimately pushed the bellwether index to new all-time highs on Monday morning. Since SPY bottomed on February 3, we have seen a huge rush of dip buyers step in, which has resulted in positive returns in 10 out of the last 14 trading sessions.

Investors that have hung on to their equity positions have largely been rewarded with further gains as an extension of the 2013 rally. The “buy the dip” mentality appears to still be firmly cemented in place and has continued to frustrate bears at every turn. Those with excess cash on the sidelines are probably starting to get even more anxious as the psychology of getting left behind starts to break down their conservative resolve.

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