As you may have seen yesterday, I transferred a little more cash (G fund) into the C fund.  I made the move about a half hour before the deadline so some of you may have missed it.  No big deal.  I'm now 40% G, 60% C.

Trying to pick a bottom can be a dangerous endeavor.  If you are adverse to risk you may want to wait for more of a confirmation before getting back in.  If I knew for sure the bottom was in I would surely have moved 100% of my account into stocks.  But I am not sure.  In fact I am more sure that we have not seen the bottom.  But I do believe we are are close enough to nibble here.  So if you wait it out, you will likely not get in on the bottom, but your account won't get pulled down to the bottom either.

When the indices were at their worst yesterday I made the decision that we could be seeing a capitulation and real bad day before the it was over.  The indices ended up down a fair amount on the day but it had actually gained back about half of the losses from the lows in the morning.  That is why I think we could still see some downside from here. 

Remember the chart of the early 1994 action I posted here on March 7th?  No?  Well I'll post it again with a little update.  I had shown how wonderful everything looked until the turn started in February of that year.  The comparisons are still quite similar, which may not be good.  Two weeks after the high in 1994 the S&P was down 3.5%.  Two weeks after this year's high we are down 3.7%.  During the next month or so in '94, the market waffled around some, with a mostly negative tone, before dropping another 4.7% in a waterfall-like decline.  If this happens again, we'd obviously like to avoid it as much as possible.  But we don't want to be crawling under a rock always expecting the worst.  Tough call.

1994 S&P 500 Chart...

                          Chart provided courtesy of www.decisionpoint.com

Current S&P 500 Chart...

                          Chart provided courtesy of www.decisionpoint.com

So I still have 40% in the G fund trying to find the perfect time to plant it.  Not an easy task.  A lot could happen in the next month so I'd like to remain cautious but I don't want to miss any strong rallies either.  This is why I am partially invested and not just going 100% stocks.  It would be easy to be trapped into a false sense of security as we saw in 1994 from early to late March.  Just before the rug was pulled out from under the S&P. 

Greenspan and gang are likely to raise rates again today.  It is very difficult to "trade" our TSP accounts during these meetings since the interest rate announcement is done at 2:15 ET.  Too late to act upon.  The market will have been open for a day and a half before any transfer we made after the meeting took effect.  So how do we anticipate what might happen?  It has always seemed to me that the market's immediate reaction during the final hours of the meeting's trading day tend to be wrong and the action is reversed in the days ahead.  So if the market sells off after the meeting today, I'd like to get more money in the stock fund.  However if it rallies after the meeting, it could be bad news for the days ahead.  Tough call.

It may be a matter of whether the Fed dishes out a 1/2% hike rather than the usually 1/4% we've been seeing.  Most likely it will be 1/4% but everyone will be listening to his tone of future considerations. 

I think I will play it safe and wait.  I'd rather buy weakness than buy before the weakness.  Unless we get another big sell off in the morning (1% or more) I will hold the way I am.  If we do fall hard I may get more money into stocks.  We almost had a panic yesterday.  Almost isn't good enough.  I can sense the fear a bit on the message board yesterday.  There's been a much more somber tone than from a week or two ago.  But we are the smart money now, right? 

That's all for today.  Currently 40% G, 60% C fund.  See you tomorrow.