If the US Dow Jones Industrial Average and Australia's All Ordinaries Indices are any guide the market is due for a correction based on technicals.
Looking at the chart above we can see that the Dow is just off its previous highs, and seems somewhat reluctant to advance. The ASX below has already reached its previous all-time high, but it too seems to be marking time, as it waits for direction from the US market.
Based on these charts today was a good day to sell down your stocks until the market sets its direction. Of course such charts only provide an average guide of market direction, and one can expect the gold sector to respond better, although it will not be completely protected from any fall.
Investment Strategy
If you are investing for the long term, you still need an investment strategy. Dont be fooled by the rhetoric of fund managers. The reason they advise you to 'buy & hold' is because they dont want to compete with you in sell-offs. Markets and industrial sectors are cyclical, so they demand trading to get the best returns. Fund managers actually cant hope to match the performance of small investors (if you are half good) because they have to manage huge amounts of funds and charge you a fee besides.
MY ADVICE is (i) look at a range of market indices and decide upon what level of correction would give you the justification you need to get in & out of the market. It might be a 5-10% retracement or a break of trend. (ii) Diversify if you dont have an intimate knowledge of the company or management. More than 30% in one company is aggressive.
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