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  • Writer's pictureJulie Skye

This 4th Week of May 2022 Thoughts

Updated: Sep 23, 2022

Matches Reality: While there are 3000 stocks that trade on the NASDAQ stock exchange, the index we watch is usually the QQQ. There are 102 stocks in the QQQ, and 90% are negative in 2022.

End of government stimulus, famine, Ukraine, China-lock down, Taiwan, fed hikes...this is one of the greatest walls of worry I can recall.

Be sure you review your 5498s, now hitting your email or mailbox. Since you can invest for the current year, or the previous year…from January – April…the IRS relies on the numbers on this form. They need to be right!

Fund Focus: you don’t have to live in Oklahoma to invest in this OK Muni fund. Find the facts, here.

Have you always wanted to buy Amazon, Tesla, or Apple? Been watching Cathy Woods and the ARKK Funds? Interested in the alternative energy stocks that will see major investments as infrastructure dollars start to flow?

The market does not "ring a bell" and tell you top is here or that the worst is over. No one knows, until months later that the worst is over. Is this year's 20% decline in the S & P 500 and the 30% decline in the tech-heavy NASDAQ just a short-term blip? Is this a bad dream that will soon be over and stocks will resume their climb? The reality is that for all we know, we don't know! We have never had so much free money and 15 years of 0% interest rates.

It doesn't matter what the market does: what matters is what WE do. It is time to build our plan to invest some of your cash so you have that cash fully invested by the time we come out on the other side of the recession, no matter when it arrives. What are smart ways to balance fear with a strategy you can live with?

1) Value averaging - Investing every month / quarter and periodically re-balancing to keep your asset allocation in balance. The key here is to anticipate how you'll feel if you go a few months and are still lower.

2) "Buying the dip - Brave / foolish (usually inexperienced) investors who have never been in a bear market "buy the dip." Market veterans joke that this will go on until the "newbies" have lost all their money long before the market has bottomed. This strategy is really "buy low and then see it go lower."

3) Market timing - "Buy-low-sell-high:" cool if done correctly and you get lucky but know you will be stressed to the max. After a period of steadily rising markets some investors start to believe they have some special insight that will allow them to do this. No one (NO ONE) has done this with for very long.

Avoiding a bear market sounds pretty simple but it is extremely difficult to do: this is why there is so much advice about not trying to time the market. Identifying a trend is not easy, but one very simple approach I use is to use a moving average and take profits when a stock breaks the 50-day moving average.

The clients who own stocks are familiar with my charts, and love how clear it is to see when it is time to talk a little money off the table. It is very satisfying to not have to ride a stock down to where you bought it, and have no profit to show.

Under rules that the SEC proposed Wednesday, funds calling themselves “green” or “low-carbon” would have to explain how they achieve their environmental aims. “A fund’s name is one of the most important pieces of information that investors use in selecting a fund: investors should be able to rely on the label and not later find they have been green-washed,” said SEC Chairman Gary Gensler. The SEC is increasingly focused on environmental, social, and governance investing, or ESG: 80% of a fund's holdings should be in the kind of assets suggested by the fund’s name…"The Names Rule." If the holdings drift below the 80% requirement, the fund would have 30 days to come back into compliance.

😊Why does this matter to you? Novel concept: a biotech fund should hold biotech stocks! ESG-focused funds that aim to affect the greenhouse emissions of their companies would have to report emission metrics for their portfolio, and annual progress toward their ESG goals. Increasingly, money managers have been jumping on the ESG band wagon as the numbers are in. ESG is not just a feel-good strategy: down markets demonstrate that ESG adds value to your portfolio. Truth-in-advertising matters, says SEC Chairman Gensler.

The Oracle of Omaha, Berkshire Hathaway, CEO Warren Buffett, made a series of interesting comments at Berkshire's 2022 annual meeting in early May. He reminded Berkshire's investors that the company would never create "Berkshire coins," as he emphasized: "Assets, to have value, have to deliver something to somebody. And there’s only one currency that’s accepted. You can come up with all kinds of things — we can put up Berkshire coins... but in the end, this is money," he said, holding up a $20 bill. "And there's no reason in the world why the United States government … is going to let Berkshire money replace theirs.” One coin’s collapse unveiled the fallibility of a system with a lack of robust regulatory framework and oversight. Despite its market leadership, Bitcoin wasn't immune to the "crypto winter" contagion driving down crypto prices. 😊Why does this matter to you? Some investors could also be worried about potential increased regulatory actions and tighter enforcement that could temper bullish sentiments in Bitcoin. Investors want to know whether crypto regulation could become a tailwind or become a headwind, as Buffett cautioned.

Required Disclosures: Always read the fine print! This content reflects the opinions of Julie Skye and is subject to change without notice and is informational and entertainment purposes. It is not a recommendation regarding the purchase or sale of any security. There is no guarantee that any statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Securities investing involves risk, including the potential for loss of principal. There is no assurance any investment plan or strategy will be successful.

Julie is an Investment Advisor Representative of Sustainable Advisors Alliance, LLC (SAA, LLC): Advisory services are provided by SAA, LLC.

Registration with the SEC does not imply a certain level of skill or training.

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