My sense is that there are plenty of folks still on the sidelines. Many of those folks have watched a 37%+ rally pass them by, and many have sold into the rally and are now sitting in non-producing cash. The skepticism is palpable, and as such will only continue to support the rally, as people are drawn into the rising market. When the last bear has been forced back into the market, then it will be time to reverse thrusters.
What I don't know is how much farther this rally can go (it has the potential to go 40%-50%), nor how long it will take (I've got no idea on this one but it could go through the end of 2Q09 and who knows maybe even 3Q09).
I'm skeptical, and that worries me. Anytime the market doesn't do what I think it should, it worries me. It worries me because I could be wrong (it won't be the first time and certainly won't be the last). Being wrong is an integral part of the occupation. How you manage that uncertainty will determine whether you separate yourself from the crowd, or simply get caught out.
I've raised a little cash, to bank some profits from the run off the bottom, and am faced with the decision whether to get fully invested, raise additional cash, or to run with what I've got and see where this market takes us.
The difficulty in navigating this market (and any market really) is in tapering your view/conviction on the fundamental outlook with feedback from what the market price action is telling you.
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