Investing, According to Me
It combines process, strategy, humility and a healthy bit of skepticism
The ROAR Score stays at 40 this week, sitting at that still-defensive-leaning mark for the third week in a row. So my 2-ETF portfolio remains at 40% SPY, 60% BIL.
ETFYourself.com's last Tuesday edition (3/26/24) was recently featured in The Money Show's Daily letter. Thanks to Money Show’s editor-in-chief Mike Larson for highlighting us!
Consider these 2 headlines and links to media reports, both within the last week:
JP Morgan: "Why we think stocks could grind higher"
ALSO JP Morgan: "Risk of Out of Blue Shock"
Split personality? Sudden change of heart? Just trying to confuse us? Hedging their bets? Nope. None of those. JP Morgan is a huge firm with many market analysts within it. So the fact that the first link above relates to someone with the title “Global Investment Strategist” and the second is from the firm’s “Chief Global Equity Strategist” should not be a surprise. But it speaks to the whole reason we started ETFYourself.com:
To dispel/move beyond Wall Street mythology and focus on the reality
To do that, first you have to know what the reality is. Yes, I know, U.S. politics is consumed with the same thing these days, but I’m not going there!
Figuring out what reality is? Hard to find. It starts with being skeptical of everything. Then, developing a thought pattern that is consistent and comfortable, and simply makes sense (to you, not anyone else). That’s why we talk a lot here about having an investment:
Philosophy
Process
Strategy
Watchlist (of things I’ll consider buying, but only when I think price is right)
Allocation strategy
Rotation/selling/upgrading strategy
If instead, an investor simply uses the Google machine to find “the best” from someone else’s views, and assume it applies to them, that’s a big risk…not to the forecaster, to the receiver of the forecast!
Same goes for simply adopting someone else’s predictions about “what’s going to happen.” How about instead, taking a balanced approach to reward and risk, seeking to identify strong ratios of former to latter? AND, rather than “collecting securities” as so many do, constructing and maintaining a portfolio that as a “team” pursues the mission, all the time.
That’s investing, according to me
Now, as to the current markets and what I’m doing to try to live up to my own belief system as stated above, here are a few key observations:
The S&P 500 is overvalued, but markets can stay overvalued. As noted in one of last week’s headlines from me, those who are perma-bears based on very sound logic, the answer to how long overvalued conditions persist before a major price decline is “longer than you can stay solvent.” That applies to any security, as well as broad markets.
A VERY interesting development is occurring right in front of my eyes regarding the broader stock market, since the S&P 500 is so top-heavy. Assuming this condition still exists as of the live session we are doing one week from today, I’ll show this on the charts in detail. Here’s what I see: