Prudent investment management involves banking profits on high-performing stocks that may go even higher, says Scott Rothbort, manager of the High Dividend Low Volatility investment model at Covestor.
He does not want to be caught chasing stocks in the fourth quarter, or trying to outguess the market, he told Wall Street Week in a video interview.
Election years are usually strong for the stock market. More upside is possible, he says. Yet the S&P 500 already is up 14.9% this year, and the most heavily weighted stock in the index, Apple (AAPL) is up 62.9%.
One part of his strategy has been to increase cash position as the market rises. His top holding in the model is now cash, at 4.6%. As a rule of thumb, his plan is to raise cash by another 1% of the total portfolio for every 1% rise in the S&P 500.
You can see the entire Rothbort interview here.