Updated: Apr 30
by Robert Holman | The DefensiveAdvisor.com | April 28, 2020
Bullish … rating of 7 (0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish) but CAUTIOUS.
Our investments are up +10% and +18% from our purchase price, and we still have a small cash reserve. The S&P 500 is down <15%> from its high and down more than <10%> YTD. So, our performance versus the broad market is a big advantage to you in seeking your monetary goals and objectives.
Technology has come under pressure in the last few days – it was the market leader when the upswing started. This trend may abate, we will see. The market pundits all seem to say that a) the market may be ahead of itself and b) a pullback is likely to occur if the virus reactivates.
To review the recent past, we used broad based ETFs to diversify our risks when the market was approaching the end of a long-running bull market. When the market started down as the coronavirus took hold, we became defensive. We went to 50% cash, then 100% cash - to not give back our gains to the market, to preserve our capital, and to have funds to invest at bargain prices.
We moved from defense to offense as the market downturn bottomed. We purchased individual stocks rather than ETFs near the market lows, to be opportunistic with our funds. It’s my belief that low prices, coupled with a market turning positive, reduces individual stock ownership risk. In other words, the opportunity for profits exceeds the risk of losses. We are now on offense, with a small cash reserve which will be put to work shortly.
So, at every step along the market’s path, we have used different techniques to control risk – but risk control has constantly been an element of our investment program.
We will be making other moves as we go further down the investment path, but I want you to become familiar with our process so far. Please note - we do this – not by trying to predict the direction of future prices (market timing) but by assessing and responding to current risks (risk-on, risk-off).
I use the word “we” because you participate in the investment process by allowing me to manage your funds for you. I know others out there need this kind of help …
As I’ve said before, compare the above with other strategies that create a portfolio, hold onto stocks as they go down (not good), and hold onto them without adjustment (not good) while prices go back up, making no financial progress and suffering lots of stress in the process.
Please allow me the opportunity to serve you. For more information, visit http://www.defensiveadvisor.com
Opinions voiced in this post are for general information only and are not intended to provide specific advice 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.