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Kaminsky's Call: Key Questions for June

Tuesday, 1 Jun 2010 | 10:50 AM ET

It's a tired cliché: "Sell in May, and go away."

But last month it worked out quite well. Seemingly in an instant, four months of gains were wiped out by an 8.2 percent drop in the S&P 500. But past is prologue, and it's the future where money is made.

So my call to action today: Stay small. Don't be afraid of cash—and here's why.

By my estimate, there are four key questions that need to be answered before the market can go higher:

  1. Will Goldman Sachs settle with the Securities and Exchange Commission (SEC)?
  2. Will we see the return of strategic M&A that signals confidence in business forecasts?
  3. Will high yield markets pick up again? (remember, this is key to deal-making and debt issuance)
  4. Which will be the first major company to take down guidance and miss second quarter numbers due to the European dilemma, and how many will follow?

With so much uncertainty in the markets, now is not the time to be the investment equivalent of a soccer goalkeeper. Don't try and randomly anticipate where the ball might be kicked. Leave that to the World Cup that commences this month.

At the beginning of May, I also recommended keeping a greater percentage of your portfolio in cash. Today, I'm even more convinced this is the right move.

If you don't want to stay completely on the sidelines, there are moves worth making. Utilize pair trades, volatility hedges with the VXX, and put buying where appropriate. But keep in mind "cash" is not a four-letter word. Once we answer our questions, it may come in handy.

Programming note: "The Strategy Session" begins Monday, June 7 at Noon ET on CNBC.


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All opinions expressed in this blog are solely the opinions of Gary Kaminsky and do not reflect the opinions of CNBC, NBC UNIVERSAL or their parent company or affiliates, and may have been previously disseminated on television, radio, internet or another medium. You should not treat any opinion expressed by Mr. Kaminsky as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Kaminsky’s opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Kaminsky, CNBC, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Mr. Kaminsky’s statements and opinions are subject to change without notice. No part of Mr. Kaminsky’s compensation from CNBC is related to the specific opinions he expresses.

Past performance is not indicative of future results. Neither Mr. Kaminsky nor CNBC guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

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