Time is running out for easy money

Well, it has been running out for a while now. Yesterday I wrote an investment note to some of my clients with direct equity portfolios and advised them on a few shares we should buy at target prices, rather lower than the then live trading prices. Today we are almost at those target prices after a rather steep drop in the South African shares.

The thing is, the countdown started when the US Fed stopped lowering interest rates in the USA. Now the Fed is looking at hiking interest rates in September or October. The long and the short of the story is that rising interest rates will be negative for most shares.

Now the question is: What do I do?

I think one should consider the following:

You already have an equity investment:
If you have been in the market for a while you have made good money. If you are still a longer term investor (5 yrs +), then do nothing. Yes, just sit on your hands! Trying to time the market will cost you.

You have new money to invest:
If you want to be an investor for the longer term and you want to invest on a monthly basis, then start now. There is no reason why starting later will work better cause we might see the markets go higher before they go lower.

If you have a single Lump Sum to invest, the safest option will be to invest a portion now and leave some for later in the year. Perhaps the first rise in rates will not have such a negative impact because everybody knows it will happen, BUT, maybe there will be a better buying opportunity later in the year.

You are a shorter term TRADER
I will take some profits on shares that have performed well and build up the cash position. Set a lower target price that will be fair value and start buying back when the share gets there.

Consider this:
The old adage is "sell in May and go away". So the markets are usually weaker from May till November but now the markets might get a double whammy if interest rates are hiked in September.

We might have seen the best returns 2015 has to offer!