The 'R' Word

I made some adjustments to my investment portfolio this month. I did three things:

1.) On 9/17 I bought a new mutual fund, JORNX.
2.) On 9/20 I reset my 401(k) existing and future elections.
3.) On 9/24 I converted my YHOO to XLE.

The effect of lowered interest rates, by 0.5%, had a huge positive impact on my current investments. It also affected my short-term confidence - which led up to those three adjustments I made.

I know the Fed is going to lower rates again before the end of the year. Not sure by how much, but at least 0.25% and I don't think 0.5% is completely out of the question - our economy is falling into a relatively small recession, and these guys are desperate. I have wanted a new mutual fund for a while, and since I have DPCCX and PRLAX, I needed one that focuses on something I believe in, and that isn't international. JORNX sounded perfect.

Another action I took to get as much out of the possibility of a short term run-up: I also swapped out all my conservative 401(k) investments for the riskiest ones I could find.

But after buying JORNX, I have so much in tech stocks... I needed an existing candidate to convert into something else. I needed to sell something so I can go ahead and pay my 20% on its gains, while I'm not desperate to take my profits. The end of the year is approaching, and I've only sold off part of one company, INTC, I can write off losses for.

I selected YHOO as my candidate. It has been pretty flat since 2003. I originally bought YHOO in 1998, and much more in 2003. I decided lately, it was having too many swings, up and down - and I don't really like the roller-coaster activity. I've been thinking about buying energy - since I have none, and it's been doing quite well for such a long time. I'm particularly interested in alternative energy. So when I started researching alternative energy funds, I learned about these things called exchange-traded funds, or ETFs. I also understand that it may still be a little early to invest in alternative energy. ETFs are similar to mutual funds, but trade like regular common stocks. They're relatively new, and there aren't very many.

When it comes to money and finances, you have to think with your head, and XLE sounded like a solid, safe, short-term investment. It's a relief to not have to worry about what's going to happen with YHOO anymore.

Here's my plan: At the end of this year, I'm selling the rest of my common stock and two of the mutual funds I've held for many years. I'm resetting my 401(k) so that everything is reasonably conservatively invested.

I'm going to pay a lot of attention to Christmas sales. Based on this, I'll decide at what point during the 1st half of 2008 I'll sell my remaining mutual funds and XLE.

I'm waiting for a downturn. I'm prepared to wait awhile, and things may actually go up for some time, but I can't count on that, because that may not be the case. But it will be obvious when the huge sell-offs start happening. And I'm so sure they will, and the extent will probably depend somewhat on how much the interest rate gets lowered, this next time around.

Then when it's all gone down sufficiently enough, I plan to step back in, and one of the first mutual funds I plan to buy is New Alternatives Fund, NALFX. I really, really like what I've read about it, and I don't care about the load, so much.

Anyway - that's my plan for now. I'll update on any changes of heart I experience over the next few months.