April 21, 2008 -- Stocks

I have a bench trial this morning where I'm representing an employee not paid his wages, so I went to the office at 6:30AM to review my notes. I did my usual routine and checked my stocks, and also noticed that oil was selling for $117 a barrel. I immediately sold most of my individual stock holdings, except for MOT (I have only 200 shares, which I bought at around 9 dollars a share), PFE (earnings already released), and SNY (a Buffett holding). I even sold GE, but will buy it back if it dips. I did buy a few shares of SWZ for my Roth, and I continue to have stock holdings in my 401(k) in the form of mutual funds. However, I now have no individual holding worth more than 2,400 dollars.

I sold most of my individual stocks because the market rose too much last week without any fundamental change in the economy. Merely because one company--Google--reported stellar earnings, the Dow almost hit 13,000. But Google is not dependent on oil prices or consumer spending, and most of the economy is dependent on those two factors. With oil priced at $117/barrel and consumer spending projected to be anemic, the case for owning individual stocks becomes harder to support. In addition, with several earning reports coming out this week, the market should be volatile. If you own stocks in a Roth, there is no tax penalty for selling, and the case for being a buy-and-hold investor diminishes with increased volatility.