4/30/24 Tuesday
The ROAR Score drops to 10 this week. My 2-ETF portfolio now stands at 10% SPY, 90% BIL.
Greetings from the “Jay Powell speaks tomorrow” newsroom. Yes, it is so comical, all of this blathering about the Fed and rates, when they only control overnight rates. But if there’s one thing investors should know about modern markets…that perception is reality!
Here’s what is also reality:
The stock market had a fine rally after the chaotic earnings from some giant stocks, which continued tonight after market close. I try to frequently show our subscribers what I think is my “best look” at the S&P 500 at any point in time. This is it. I see a new downtrend that needs to be broken to the upside before any hope of this being anything better than a trading range market can occur.
The Nasdaq 100 (QQQ) and Russell 2000 (IWM) look nearly identical.
The lower part of the chart, my favorite PPO indicator, is showing that classic sign of “I’m going to get y’all excited to buy the dip, but I’ll quickly lose my mojo and continue south.”
This is a chart of daily prices, and the downward trend is getting clearer in the shorter-term time frames I watch. Stay tuned.
And then there’s this. The Treasury Curve shown in blue today and red from 2 months ago. Short-term rates out to 4 months have not really changed. The rest of the curve from most T-bills out to 30-year bonds is…use your favorite term:
Rising sharply
Re-accelerating along with inflation
A sign that the markets are finally freaking out about the giant U.S. debt problem
Making people wish they had been able to get mortgages back at 3-4%
Making Rob love T-bills even more than he possibly thought he could (true!)
Something else
And that leads me to the “open message” I wrote below, which explains that in my view, markets have changed so dramatically since the pandemic, we have to change with them. I am no longer willing to “fight the tide” by focusing too much time on finding the next great stock, or trying to force “long-term/buy and hold” investing on myself. I’ve been through too many cycles, and seen what that type of complacency can do to people’s wealth. When I was an advisor, I never let that happen, and I sure as heck am not going to wake up every day looking for the next bull market…or bear market…to start. Here’s what we’re doing about it at ETFYourself.com
An open message to free and paid subscribers of ETFYourself.com
To really make ETFYourself.com a top-tier publication, we feel we need to "rally around" my "very best thinking,” and do so efficiently for all concerned. With more than 1,800 subscribers in just our first 7 months, and plenty of dialogue with many of them, we’re prioritizing what the intersection of what the subscriber base tells us it wants, and what we can deliver.
We are in this to make an impact. The other choice was full retirement. No thanks!
1. The ROAR Score in multiple time frames
Investing is finding a balance between offense and defense, and being willing to shift the mix tactically, over whatever time frame is relevant to the investor. Less time on “picks” (what to own), more time on allocation (how much to own). The latter is where returns come from. More investors need to realize this.
2. Watchlist/depth chart of eligible ETFs
Those I am considering for use on offense or defense "at the right price". This is at the ETF level, no consideration for what my or anyone else's portfolio will do with that info. Short summaries of why I'm following each ETF.
3. Quick ETF charts comments to tell the market’s story
Yes, I’m the chart whisperer, so more charts and notes, less long form commentary.
4. The 7-ETF portfolio
This is really more educational than “what to own right now,” though subscribers are welcome to just follow the moves I make in this portfolio, updated weekly. This part of ETFYourself.com is more of a starter set for ETF investing and portfolio construction.
The service at SungardenInvestment.com is the next level of precision and hands-on research. That’s why it is priced higher.
The overwhelming message we get from subscribers is this: "tell me what looks good or bad and I'll take it from there." You asked for it, we are delivering it!
Highlights from Institutional portfolio (www.SungardenInvestment.com)
(Here’s a portion from the latest update I sent to subscribers to our other service)
Days like today are good measuring sticks for how much I am managing risk here. The total portfolio was down 0.22% today. S&P 500 was down 1.57%, and Nasdaq and Russell 2000 small caps were off more than 2% each. But at least bonds were there to rescue stocks…not. AGG bond ETF down 0.41% today. AOR, the 60/40 ETF, was down 1.12%. This is shades of what 2022 was about, for similar reasons.
This is “me.” This is how I’ve been navigating markets for 20 years. And while a sudden reversion to “happy times and hope-ium” in the markets will cause my portfolio to drag a bit, for a little while, I have always felt it was worth it in order to make the market prove those moves can last. The average stock is now FLAT for more than 3 years. So unless the goal is to buy and hold FAANG-style stocks, the defensive approach has been helpful. For me, in semi-retirement, I think it does.
Risk Management Matters
Another way to look at this is that in one day this conservative portfolio beat the S&P 500 by 1.35%. If someone had $500,000 invested in that portfolio, they would have lost $1,100 today. An S&P 500 portfolio would have lost $7,850. That difference would have covered the $3,600 annual cost of the institutional service…nearly twice…in a single day. And a 60/40 investor would have seen that $500,000 portfolio drop more than $5,500 today. That’s more than 1.5x the annual cost of the institutional research service, where I detail, move by move, what I do with the vast majority of my own money. And I explain why at each step, in a portfolio management context, something I find many self-directed investors are only somewhat familiar with.
This was one day. Down markets can bring 15x-35x the type of losses “traditional” investment styles delivered today. Risk management matters.
Do not confuse this with a “sales pitch.” It is simply how I view the investment world and my role in it at this phase of my career. I am more focused on my own money than ever in my nearly 60 years, and that will only intensify. Because markets have changed, and I’m changing with them, using the tools I’ve used for decades, adjusting them to today’s investing realities.
So while I still have a chance, I am laying out the case I made to myself and my wife about how our money will continue to be managed from here forward. How many others come along for the ride with us as paid subscribers is not in our hands, and does not alter what we do for ourselves. If this type of blunt communication turns you off, we will not take it personally if you un-subscribe.
Or, if you really connect with the thought process described here, you’re welcome to join the club, via the offering at ETFYourself.com or SungardenInvestment.com. That club is going to get more active in discussing markets, learning about ETFs and how to use them, and playing solid defense at a very high level from here forward.