by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com
INSIDE: Current market rating, market trends, stock picking, and a free offer.
MARKET RATING … Going to 6.5 (where 0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish) – still bullish but adding caution. The market continues slowly rising – it goes mostly sideways with an slight upward bias (todays path is different from 6 months ago when we had a much more rapid rate of increase).
I control risk by adjusting our portfolio holdings as market risk increases - either selling down or selling out - in order to preserve our capital. Then when the risk-reward profile returns to bullish, we invest our cash opportunistically for capital gains.
THE MARKET … was down all 5 days last week, for a total weekly decline of 2.36%. Is this the start of a new downward trend in the market? Or, is this just like the week of Jun 14 when the market was also down all 5 days? Or, is this like the 5 consecutive day trend beginning Jan 21? Note that in both of the prior cases this year, the market recovered within a few days. But, will this time be different?
On Monday, all indexes started up nicely, but as the day went on, first NASDAQ then S&P 500 went negative. The Dow however did not go negative and ended with a nice positive gain, while the NASDAQ and S&P 500 managed very small gains.
On Tuesday morning all indexes opened up but headed down almost immediately. As of this writing, the Dow and the S&P 500 are down (for the 6th time in 7 days). So, is this the start of a new downward trend in the market? While it kind of feels like it, we don’t invest just on feelings.
Rational thought must prevail. It’s good to note that there is no single event precipitating a selloff. Because sell-offs precipitated by a single event, and its’s related consequences, can be the most devastating. In my experience, multi-factor sell-offs usually are a little less intense.
So, could this end up being another pause along the upward path? Yes. But, it could be otherwise. Close monitoring will tell us if a downward trend is developing, and it’s causes.
STOCKS … Picking stocks that will perform strongly in this environment remains challenging, yet good opportunities usually can be found. Selecting them is challenging and timing purchases is important.
TO MY EXISTING CLIENTS, THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018, up more than 80% in our moderate risk portfolios for the 3-year period, after all expenses are deducted.
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Opinions voiced in this post are for general information only and are not intended to provide specific advice to or recommendations for any individual, without complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Past performance does not guarantee future results.