Got out of the market

It looks like it was a suckers rally earlier this week. Given our financial goals within the next two years, I decided to pass on dollar cost averaging and just get out of the market. I haven't sold our Bonds or TIPS yet, just the stock funds. Now it's time to look for more conservative, defensive positions. Like many people in 2000-2002, I chose to ride it out and got burned pretty bad. This time I'm getting out while we're ahead. Right now there is just way too much doom and gloom - more & more home foreclosures, tightening of credit, weak dollar, inflationary pressures, etc. And yah, I know people say election years are often good years for the stock market but I am just not convinced this year (or at least the next two quarters) are going to be very good. From all the news outlets that I can see, it seems like corporate profits have been mixed but the trend could get consistently worse and then maybe we'll start seeing higher unemployment rates. And logically wouldn't that perpetuate a viscous cycle? It's going to be interesting to see how Bernanke handles the rate cuts and juggle stock market growth vs inflation.

With the above said, I'm thankful for our diversified strategy. Just seeing how a lot of the high fliers & momentum plays of last year have fallen so hard recently - I think to myself how worse it could have been. I'm not trying to preach or evangelize here. I'm just saying our allocation mix had the right risk/reward ratio for us. I'll definitely go back to the same allocation mix when things are less crazy. And of course knowing when to get back in is extremely challenging. You just never really know when the market is at it's bottom.