Getting defensive – Cash is not Trash

I’ve been very busy selling positions this week. When the Dow, S&P500 and Nazdaq all flash sell signals, even stocks that are holding up relatively well become sell candidates, especially if we’re sitting on gains in them. A quick calculation tells me we’re now 67% in cash, and that will grow come Monday as I’ve targeted a couple mutual funds and stocks that just gave sell signals at Friday’s close. All bear markets start as pullbacks so I like to take action quick by beating a path in retreat. I’ll be the first to jump back in when the tone of the market changes, but this is no time to be a hero. Stocks that put me in the “house of pain” (as Jim Cramer likes to say), are the ones I stubbornly refuse to sell or hold because they’re “buy and hold” positions like Bowater, which I’m holding at a 15.82% loss (ouch!), or NVEC which is down about 18% (ouch! Ouch!). Ignoring sell signals can be painful. All said though, we’ve done a great job of locking in profits and becoming defensive quick, without giving back hard won profits.