Stuck in the Middle with You

This song was recorded in 1972 by a Scottish group named Stealers Wheel. It reached #50 on the Billboard Album chart that year. The song was written by Gerry Rafferty and Joe Eagan and released by A&M records. It was a parody describing how the musicians felt at a cocktail party surrounded by recording studio executives (clowns to the left, jokers the the right). The band was formed in 1972 and broke-up in 1975 but unsuccessfully tried to reform in 2008. The song is a little strange but the video is said to be downright weird. I also feel like I'm stuck in the middle in my investing activities. The recession so many analyists predicted for 2023 never did arrive, is it coming or not? Interest rates have peaked (so they say) so here we are waiting for a rate cut. The greatest thing since the PC is here in the form of AI (Artificial Intelligence) and I'm still waiting to see how it will change my life-what's left of it anyway. The electric vehicle revolution is upon us but here in Indiana I almost never see a Tesla or any charging stations. So what is an investor to do to make money this year? My take on the situation is that: 1. Interest rates have peaked at least for now; 2. AI is going to be a huge benefit to most if not all industries; 3. The much anticipated recession is on hold for now. Since the market believes rates will decline this year, banks and financial stocks rallied over 30% in the fourth quarter of 2023. Since the market believes that AI will transform the way we use computers, Nivedia, Intel, AMD, and other chip makers have skyrocketed, not to mention software companies like Salesforce, Microsoft and Meta. And since the market does not buy into the imminent recession story, the market rallied 11% in the fourth quarter of 2023. Because I feel like a tween (caught between child and teenager), I am struggling with my next move. Should I buy stocks that will benefit from lower rates and new technology or bide my time to see what plays out? Should I take some profits in tech stocks that have been strong lately or let them ride? Should I buy long duration bonds that will generate current income and possible capital gains if rates do come down as expected? I really don't know the answers to these questions so I will have to take my clues from recent market behavior. First of all, there's no hurry. With money market funds paying 5% on liquid cash, it's OK to just sit and enjoy a risk free return for a while. Secondly, the market needs a little time to cool off and settle into its valuation. There is a lot of cash on the sidelines just waiting for an entry point and earning a decent return too. When the time is right I plan to buy stocks that benefit from lower rates, new technology, and a strong economy. As long as CD's pay more than the rate of inflation, I will also maintain a healthy position there also. A cautious balanced approach is best in times like this. I will always have a portion of my assets in stocks but buying at market highs and not taking some money off the table will make me look like a clown down the road.