Investors may want modest exposure, a couple of long-term winners and a couple pilot positions in different sectors, to stay engaged with the market.
We're in a choppy trendless market with the market exposure model at zero since 2/19/2021. The market is showing some resilience outside of tech and it is just strong enough to entice investors to buy, but weak enough to force stop losses.
In addition to preserving capital, you want to preserve your psyche. Taking a series of losses in a bad market can make you gun shy when the market shows a clear uptrend, and you want to be aggressive.
If you have held onto stocks that are living below their 21-day and 50-day lines, you may want to exit, especially if they have wedged higher in light volume. If you are holding a stock or two with good gains, you can try to weather the storm but do not do that with the bulk of your portfolio.
It appears we're now in a nascent inflation regime with the federal debt at levels even higher than WW2. Interest rates have been declining for 40 years. Debt service is a concern, though not yet by the Market. Medicare/Medicaid, Social Security and Defense account for 88.2% of the $3.4 trillion of tax revenue collected by the US treasury. Service on the debt is the fourth largest budget item which now stands at 12% of budget. If these trends continue, financial and economic dislocation will surely follow and with all such financial shocks the speed at which the dislocation takes place will be dramatic.