A Chance to Recover Your Nest Egg if the Rally Continues?

There are several things happening right now that might give us a significant rally in the stock market. It may be short-lived but it may give Baby Boomers an opportunity to reduce their exposure to the stock market and put some money into cash.

No one knows if this rally will continue or how far it will go. Baby Boomers who have large paper losses in their retirement nest The Four-Year Presidential Cycle eggs should consider taking advantage of any rally by selling into it.

According to Arthur Merrill who has done extensive studies on market phenomenon there are several observed events that can occur in the markets at this time. These include;

  • The Four Year Presidential Cycle
  • The Market Year

As you can see since 1886 there has been a general trend up towards the end of the Election Year. We might be already experiencing this despite the economic crisis still not being resolved.

Combine this with the fact that November, December and January historically are the best 90 days in the stock market.

Then add the extraordinary steps being taking by almost all governments around the world that include;

Include the fact that the fund managers are accumulating a large amount of cash. At some point they have to invest it or violate their investment mandates.

If there is a chance of a serious rally before a recession expected in the new year, then this is it.

So far the Dow has rallied from just over 8,000 to 9,300. There is a possibility it could continue to rally to 10,500-11,500. With Merrill’s observations and governments around the world manipulating the markets it may well be a good bet.

If Baby Boomers have all their nest egg tied up in a pension plan or superannuation plan there may be an opportunity to reduce exposure to equities and take some cash out.

It may mean selling some equity investments at a loss but only selling what you need to get cash to live on may be a good idea. Remember Baby Boomers in retirement don’t have time on their side to replenish their nest eggs from a salary or wages.

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