ROARING KITTY RETURNS...so what?
While he was gone, our own Roaring Kitty moved in. Here's what she says now.
The ROAR Score stays at 10 this week. My 2-ETF portfolio stands at 10% SPY, 90% BIL.
If you don’t know who Keith Gill is, here's a link to get you up to speed. He gained fame under his screen name “Roaring Kitty” a few years ago. He has another profile name, but this is a family site. The bottom line is that the popular movie that told the story of the so-called “meme” stock mania was titled “Dumb Money.”
And speed is a good description of how the stocks of Gamestop (GME), AMC Entertainment (AMC) and other so-called “meme” stocks have performed since the US stock market opened yesterday. GME, whose revenue has generally been falling for 10 years, closed at $17.45 a share Friday. It is trading at about 3 times that as I write this ($51), off from nearly $65 this morning.
So apparently, Roaring Kitty is back. But I have some news for him. He’s been replaced. Every Tuesday, our kitty, whose actual name is Phoebe (she does not have a screen name because she’s not a fan of social media), roars in the picture at the top. All kidding aside, the ROAR (Reward Opportunity And Risk) Score we update each week and as needed beyond that has been a strong rudder for our subscribers since we started ETFYourself.com around 8 months ago. It is a starting point, and it won’t make people rich overnight. But it is also a lot closer to what modern investing is about: balancing reward (upside) potential in the investment markets versus avoiding major losses in value. Just ask some of the Gamestop investors depicted in the movie how important risk management is as part of the investment process. And, how important it is to have an investment process in the first place.
“I’m buying because it is going up, and other people are too” is NOT an investment process (did I even have to say that?)
Why should we care about reckless casino-like speculation disguised as “investing?” If you subscribe to this newsletter, you probably don’t spend much time chasing meme stocks, whose fans often don’t want to be bothered with a lot of details about traditional ways of valuing stocks (or “stonks” as the Reddit social media crew refers to them as). Back in 2021, when we were all still suffering from the limited mobility of Covid-19, stock trading took off.
This helped usher in a long list of things about modern market behavior that I think many are still catching up to. THAT is as important a reason to be part of our community as anything else. I see my job as being on the leading edge of what markets reward and don’t, and why. Because it has dramatically changed since even 5 years ago. Meme stocks are part of it, but more because it shows what can happen when modern markets go off the rails in isolated cases.
Some of the pandemic era surge in interest in self-directed investing served to expand the tent of well-intentioned people. They want to learn what my peers and I have learned over the past few decades, managing wealth professionally, making lots of mistakes we learned from, and understanding when the ecosystem is changing.
It is answering questions for folks like:
How does this all work?
How do I invest responsibly?
What is a reasonable expectation for what will happen to my money in the public markets and over what time frames?
As someone on the side of “helping others learn what I know,” that has been a fantastic and rewarding experience. And now, this again, with the meme stocks. Oy!
Meme stock mania is important to investors. Here’s why.
I don’t predict the future, I assess reward and risk and try to strike a healthy balance. And I aim to teach others how to apply that to their own situations, as they see fit. I am a provider of “raw material” if you will.
So this is a good time to remind our audience that what is happening with the meme stocks, as well as a lot of other stuff going on in the current market environment, which I’ve written about here extensively, is all very important. It is part of the path of becoming what I call a “serial learner” about investing. The markets don’t stop operating, so our money is always potentially in harm’s way, as well as in position to potentially benefit from not only our hard work, but some luck along the way. In the premium section, I highlight one that represents that latter situation.
For all, here’s my latest view of the S&P 500 index. A few things here:
The long, sharp, steady advance, shown in that rising trendline pair of black lines from November to March, is done.
What came next is what I’ve pictured in the oval to the right, on top and on the bottom of the chart. That’s a trading range, as a I discussed last week. I see some parts of the S&P 500 at the sector and stock level breaking out. Their charts look nothing like this. And my YARP stock portfolio is rolling in dividend income and some nice price gains as a result. More on that at www.SungardenInvestment.com.
The lower part of this chart (circled) says “wait before you lift the ROAR Score, Rob.” It stays at 10 for the moment, with a potentially market-shaking CPI report coming Wednesday morning.
This is one of those times where the 2-ETF ROAR portfolio I run is, for a change, less interesting to me than what’s going on in the YARP portfolio and the CORE ETF portfolio, as well as the 7-ETF portfolio that premium subscribers get via ETFYourself.com. More on that below.
And remember this: OUR kitty is the new “Roaring” one!
