I feel very comfortable with the IA portfolios invested position, as well as the hefty chunk in cash. Here's why.
Some of your better technical market guru's (those with the best accuracy- Peter Lee, Bruce Bittles) are in agreement that we are in a cyclical bull market that is quickly reaching its maturity. Once the cyclical bull ends, then the market will revert back to the cyclical bear.
Peter Lee has been calling for 1350 on the S&P, with a potential blow-off rally that could carry the S&P as high as 1400. With the S&P currently at 1308, and money market yields at 4.2%, 4.2% higher on the S&P would put the index at 1362. This being said, why risk your cash in the stock market when you could get a safe 4.2% in a money market?
As far as the DJIA is concerned, Lee has a target of 11,500, with a blow-off potential of 12,000. The DJIA currently stands at 11,315, 4.2% higher would take the averages up to 11,790, so once again I ask, why risk it?
For my money, I'll take the 4.2% and sleep well at night.
If you want a little more yield, check out some of the CD rates at Fidelity.
If youć± e looking to park some readily available cash, not all money markets are alike. For example, bank money markets are paying 2% or less, and full commission brokers are paying less than some discounters.
TIAA-CREF 4.35%
Vanguard 4.33%
Fidelity 4.2%
Schwab 4.05%
A.G. Edwards 4.04%
When you compare the difference between TIAA-CREF's 4.35% to A.G. Edwards 4.04%, an investor can keep .31% more on $100,000 at CREF, or $310/ year. Of course, many full commission brokers shave off yield and keep the difference for themselves.
If you don't think this is a big deal, multiply the amount by the number of years you have been receiving the lower yield by the difference, and see what you come up with.
On a million dollars, the difference is substantial.
