Thursday, June 23, 2011

I'm upping my cash holdings

The European markets falling today.
I'm retired. My RSP is my financial lifeline and it is tied to nothing but equities and one very small GIC.

The GIC is so small that until I started writing this post, I had forgotten that I even had it in my portfolio.

The market has been soft for awhile with very low trading volumes. A good friend, also retired, recently went to cash. He's pretty astute and I took his move as a cautionary warning about the health of the market.

Now, the markets have begun to pull back and I have begun to follow my friend's lead, but not to the same bold extent. I am converting some of my portfolio to cash.

My RBC O'Shaughnessy mutual funds no longer fit my portfolio allocation plan and I was holding them only to reap the reward of a continuing recovery after The Big Fall. The recovery seems to have reversed and it seems like a good time to bail. A lot of the economic indicators are negative and Greece is looking more and more shaky.

My Mawer World fund, one of my favourites, a little gem in my book, has also been liquidated. I can't say dumped. The O'Shaughnessy funds were dumped. (I also dumped my TD e-funds. Not a one had recovered completely since the crash and they were not paying the dividends demanded by a retiree.)

My cash holdings are now a little better than 10 percent of my portfolio. Will I sell some of my ETFs and lighten my exposure to equities even more? Maybe. I'll let you all know if I do.

If this has been nothing more than a correction, I'll take this as a chance to refashion my portfolio closer to my allocation plan. If this is a double dip, I now have the cash to take advantage of a bad situation by buying good stocks at low cost. This should increase my chances of having my portfolio make a speedy recovery.