Risk and Reward?

Do you know how bad I want to take my last safe monies and put them all into the Small Cap Index. S-fund? It is large. The more I think about it the more and more it resembles a bet more than an investment. So what are the odds? Let’s look at a couple.

If House, Senate, and President can’t come to terms it is likely to get ugly quick.

If the do come to terms, then yes the market will likely rally. But after that huge move last Thursday and Friday, has the market already built that into the equation? If so, then there might not be much of a rally and all the risk is really lower.

Looking at the charts for the S&P500 and specially the Small Cap and International indexes, they are bouncing off highs. Yes believe it or not, bouncing off highs. So the odds are really more in favor of a pullback on the slightest negative news than the odds of price continuing higher.

Technically speaking you can argue that all three indexes fired a buy signal Friday and Monday we should have stepped back in. The Monday morning reversal from 12 points down to green was also impressive. This morning we are once again in negative territory and it makes you wonder by 11:15 to noon if will be rush back to green again.

As you can see, even for someone like me it can sometimes be a very tricky thing to know whether it is a go or a  bail at decision time. This is what drives most to put their feet in concrete and cannot make a decision. This is where I have come to terms with all it and can make a decision and live with it right or wrong.

Conclusion: I just think technically, the Charts, I see no reward at the moment and it looks like all risk.  News: All risks and your just betting on a direction with your retirement account. I will make no move today and will live with my current risk setup of 40% G, 40% S, and 20% I. To me, even this setup is high risk. When all the dust settles with this political game, I will be more at ease on committing the remainder of my capital.

Good Luck to all…..