Navigating Market Peaks: Strategic CEF Investments Amidst Tech Dominance
A Banner Year for Equities, Fueled by Tech Giants
The conclusion of 2025 saw equity markets, notably the Nasdaq Composite and S&P 500, deliver another period of strong performance. The S&P 500, in particular, achieved its third consecutive year of double-digit growth, underscoring a dynamic and profitable period for many investors.
Concerns of Overvaluation and Market Concentration
Despite the impressive returns, this prolonged bull market has sparked discussions about potential overvaluation. A significant portion of these gains has been attributed to a select group of mega-cap technology stocks, often referred to as the 'Magnificent 7,' leading to concerns about market concentration and the sustainability of current growth trends.
Maintaining Liquidity for Future Opportunities
In light of these market dynamics, I have adopted a prudent strategy of accumulating a substantial cash reserve since April 2025. This approach ensures that I have sufficient liquidity, or 'dry powder,' to capitalize on potential market corrections or attractive investment opportunities that may arise.
Consistent Investment in Closed-End Funds
Even with a cautious stance on the broader market, my commitment to investing in Closed-End Funds (CEFs) remained unwavering. I continued to make regular monthly purchases for my CEF portfolio, concluding the year 2025 with consistent investment activity, demonstrating a balanced approach to market participation and risk management.