Last week’s Thoughts focused on the different time-frames for market trends:
Over the last few weeks, we have been whip-sawed by worries the Fed would raise the short-term FED Fund rate, but today, headlines have escalated about the Short-Term Trend. Predictions are all over the map, with some calling for a 10%, 15%, or even larger, decline in the major stock indices. Expect to hear this on the evening news, from your Uber driver and maybe your hairdresser.
When Covid-19 ramped up, home-bound, wanna-be traders became enamored with the idea of becoming rich and they flocked to online-trading: many traded in cryptocurrencies. Those of us who are more seasoned joke; “day-traders won’t stop til they lose all their money!” Many of those traders are finding out stocks don't always go up.
Commentators talk with urgency about what you might need to do: please know this can be un-nerving for even the most seasoned investors. One of my long-time clients used to call “and see how I was holding up.” This is what I am here for!
I encourage most investors to look Long-Term UNLESS you anticipate NEEDING TO WITHDRAW FUNDS in the next few months. It is rare that market volatility would cause us to sell: the only exception is if concerns about the market impact the quality of your day.
It is my job to watch the Short and Intermediate Term, but the most important part of my job is to ensure your portfolio reflects your Risk Tolerance: how you feel about the up / down days; and your Risk Capacity: what risk you need to take to meet your long-term goals. To do this, we use Totem’s Risk Tolerance Survey: I’ve been sending these out over the last few months. If you can’t remember seeing an email from Totum (or want to re-do your risk tolerance), email me and I’ll resend your Risk Tolerance Questionnaire.
We started this “topping” stage back in the fall of 2019 when I began writing about “9th Inning Investing” and I expected to see the market correct then, before Covid 19th hit. We have not had a 5% correction in the S & P 500 in 14 months and it has been 19 months since the S & P 500 touched the trend line I talked about in last Friday’s Thoughts, using Apple to demonstrate a company that was way above its 12 month-trend-line.
What I AM happy about is that FINALLY we can put some of your cash to work into my Rising Interest Rate Capsule Portfolio: the 10-year bond is now at 1.77%.
I don’t know if this is the time is we move into correction territory (down 20%), but there is absolutely NO chance that the market will never have a correction again. The only question is when.
Don't hesitate to call if you have questions, concerns or want to review your risk profile.