Considering taking a profit

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You know, the market has been pretty up the last few months, and the rally seems overstated. I know the mistake I made before was I had this feeling that my Janus Fund, up about 60% in one year was really great and I should have sold.

But I was following the old "buy and hold" advice and just held on to it.

Well, here we are again. My Janus has returned 45% this year. . .still not at it's high where it was but jeez. . .45%. . .how much more can I ride this? (the same question I asked before). I could actually take a profit now and be very happy with that for 1 year and move into something more conservative.

Does anyone know of a good ETF I could at least transfer into, that would offer nearly the same exposure as JAOSX (volatile, risky, good performer) but I could at least put a bottom order on it? JAOSX is a lot of emerging markets, Asia and Latin America?

If my silver tops $16, I may put a bottom in on that too.

If you are a buy and hold type of investor, I suppose this conversation isn't for you. I have typically been a buy and hold but I think it's time to alter my strategy.

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I don't really know what to say because my buy-and-holds are currently out-performing both the market as well as my trading. But it kind of make sense since the money was DCA'ed into that huge dip in the first quarter, and has been climbing since.

I wouldn't knock yourself for not knowing the top or bottom. I don't think anybody does until it's too late.

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Well. . .again, it's not so much about timing (I guess it is sorta). . .it's about again, "How much more can I expect to ride this wave?"

I mean, I like to surf occasionally (body surf mostly as I am 40 you know ). . .there's a time to just get off the wave. . .yeah, sure, I may have missed a really gnarly ride but if I rode at least half it and had a good ride, I am happy. . .well. . .this is probably a stupid analogy, LOL.

I am not really talking about selling, just putting a trading bottom in. I guess I could just watch it and put a "bottom" in now in my mind. It's around 38 now. . .I could bottom it out at 34 (a 10% drop) and just keep adding 10% if it keeps climbing.

I found one ETF - GML. . .it's exclusively Latin America though whereas Janus is more Global.

Again, the last time I had this feeling - circa 2007.

A 45% return is just begging for a correction.

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YOu know. . .I wonder if now isn't the time for a financial ETF. Yeah, this ETF was around 11:

IAT

and now at 20. . .but I think now as the big banks are paying back the bailout money and that money is being handed off to the smaller banks, that a gnarly ride could be ahead. . .will I do as well as the person who got in April? Nooooo. . .but. . .I just want to ride the wave a little. . .I don't want to ride it with all the risk apparent in March/April this year.

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Well. . .again, it's not so much about timing (I guess it is sorta). . .it's about again, "How much more can I expect to ride this wave?"

This here is why I stick my trading to individual stocks, because at least with individual stocks of my choosing, I can kind of get an answer to that question and even keep track of it.

But with a mutual fund, especially an international fund....

Financials may not be a bad idea to buy. It would have shot up by now, although I do think some financials better-positioned than others. And again, that goes back to my preference in individual stocks then, because I'd rather pick something that has a better position than something that doesn't.

I don't have a problem with ETFs either, but I think the best way to use them is if you have a selective buy-and-hold strategy. That is, you still have a buy-and-hold / accumulation strategy in mind, but rather than just arbitrarily buying with broad diversification in mind, regardless of valuations, you are selectively buying and holding only certain sectors that you know the valuations are relatively cheap right now.

It does require someone who is capable and interested in sitting down and figuring out the market enough to find these bargains, but over the years, you have demonstrated to have such a capability and interest. That is what I recommend anyway. Stick with buy-and-hold, but buy selectively via ETFs. And in that case, Financials ETF does make sense right now.

However, if you wish to trade instead, then may I recommend something smaller and easier to valuate, such as individual stocks?

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I'd hold onto it. There's a lot of upside left in that fund, assuming your horizon is at least 12 months.

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You know Peter Lynch wrote something that always stuck with me and I can't remember where I heard it. . .something about the number 7 being "magic" - that a 7% return is the magic return # you want to seek.

His studies showed that when you get an 8% return, the extra risk you take for that 1% is disproportionate. When you to up to 9%, the risk starts to exponentiate and so on. At 6%, you haven't quite gotten the return for the low risk you have assumed.

I don't know if what he said was right but that's the kind of thinking I employ when I examine a fund up 45% in one year. I have to think that the risk I am enduring is not actually worth the reward and perhaps it's time to start actively managing my portfolio, not so much time.