Save Me San Francisco!
And how to "roll with the changes"
Fresh off today’s live session on technical analysis (thanks to all who attended), here is this week’s Tuesday post.
As a reminder, the site now has the 4-part video series Emma and I recently recorded. It is designed to help open investor minds to what they can do if they can hear straight talk, perspective and a realistic presentation about how the quirks of modern markets can be managed. By yourself, with some regular insight from us.
This week’s commentary
This week’s title is dedicated to a San Francisco-area resident who again provided a pair of very to-the-point, informative commentaries last week. Emma not only handled things like the experienced pro she is, but there was some irony. Dana and I were away for the week…which meant I was constantly tracking, researching and trading from somewhere other than my desk at home…and last Tuesday we saw our favorite band, Train, perform live.
It was a great trifecta, where Train was proceeded by serial 1980s hit-maker REO Speedwagon (whose 72 year old lead singer hasn’t lost a step) and the best cover band you’ve never heard of: Yacht Rock Revue. We don’t know everyone’s taste in music, but if you lived through the mid-1970s and 1980s, check them out on your favorite music app.
Train has had many hit songs, and in between sets I took a glance at Emma’s work last week and decided that this week’s title had to be a Train song. So “San Francisco,” thanks for saving me last week!
Roll with the changes...a stock market story
REO Speedwagon finished their set before Train came on with 1978 hit “Roll With the Changes.” And does that not summarize 2024 for investors to a T (not Mr. T)!
To show how markets have changed in a quick and hopefully effective demonstration, here are a few charts I used in the live session today. As I said to the audience, I also consider THIS to be “technical analysis” which was the subject of the session today.
This first picture below shows one of many calm periods for the average S&P 500 stocks (via the RSP ETF). Notice that for all of this period (late 2012 to early 2014) the 3-month return from any starting point was between zero and 15%. Life was good. And markets were like that for much of that past decade.
Here’s the same chart analysis from the start of the Fed rate hike cycle in 2022, through now. Notice anything different? You should. The top range for the average S&P 500 stock in a 3-month period was still around 15%. But the drops were double-digit at times, as well.
Last picture, below. This shows where we’ve been from late 2021 through now, when it comes to a range of ETFs that track market segments or strategies. Here’s the “story” the market told during this time:
FAANG stocks pulled up the S&P 500 (SPY), creating a false sense of security
The typical stock (blue line) is up 7% in 31 months, and 100% of that just happened, and is in danger of giving it all back
“Conservative” investing netted nothing including income received
The heralded 60/40 portfolio matched the paltry 7% in 31 months noted above for EQAL
Bonds? Well as the Brooklynites say, “fuggetaboutit!”
SUMMARY: the market has been changing before our eyes for 2 1/2 years. That’s why charting, portfolio position sizing, incorporating ETFs and even options for some investors are what modern investment management is about. I truly believe that we are edging ever closer to a period in which complacency in investor education about how modern markets really work, and how to navigate them, will rear its ugly head.
There is a bull market in “getting smarter” about how to grapple with today’s investment markets, whether one is a newbie or a 38-year vet like me. Learn to “roll with the changes” without being arrogant or passive. Because San Francisco or any other city won’t save you :-)
Okay, below we will talk ROAR (it changed this week) and the 7-ETF model (it also changed this week) for paid subscribers.