Time to Take Some Profits?

It could not have been a better year for the investors as S&P500 has posted in excess of 20% return for the year with still one month left in 2009. What is an investor supposed to do? I think it is time to reassess the risk, consider blessed by the Market Gods, take some profit and stash it away in little more conservative asset class. That is the beauty of Modern Portfolio Theory and it will be quite timely to put that in practice right now.

Yes, in 2009, financial markets have come out of the crisis (at least for now...), economy has stopped its free-fall along with all types of markets, be it equity, credit markets, commodities, real estate, credit markets have unfroze and thawed well, credit is flowing smooth at least for the corporate markets, if not for individuals, government has started spending like crazy, so, what is to be afraid of. Well.. a lot. The direction U.S. government has taken is surely a short-term fix and ignored a sound long-term solution at the peril of our future financial health.

The end result is that the sick patient has sure gotten a good shot in the arm to start walking again, however, it has not been to a surgery room to free itself of its ailment completely. Only a lengthy surgery and long recovery time would have done the job. Without that, there is no sustainable and healthy recovery. It is more of a facade of a recovery.

Smart investment decision would be to clear some profit and wait for more opportune times.