August 4th, 2025: Turning Unrealized Gains into Realized Profits Capital Preservation in Action

"Performance is important, but Process is critical." - Mike Turner

AT THE BEGINNING OF THIS WEEK:

This morning, the TMI (S&P & Nasdaq... Total Market Index) rebounded strongly, following an abrupt sell-off late last week. The pull-back last Friday was enough to trigger our "Capital Preservation Rules", which allowed us to turn a lot of unrealized gains into realized profits.

Everyone who was with us from the beginning of the trade generated some substantive profits. Our 1x clients generated a profit of 15.41%; Our 2x clients generated a profit on the trade of 30.41%; and our 3x clients generated a whopping profit of 47.55%. Keep in mind that all of our clients were 100% in the trade. This means their entire portfolio grew by these great percentages. Those are the kinds of returns we all want. Now, we wait safely in higher-yielding money market funds, looking for the next opportunity.

As you will see in the TMI chart below, all the major trends are still moving from lower-left to upper-right. That is telling us one, and only one, thing: The current trend of the market is bullish and we know it will stay bullish until it doesn't. Nothing more. No one knows how long this bullish trend will last. No one knows if the sell-off last week was a 'bear-is-coming' signal or just an aberration. You don't know... the financial world doesn't know... no one in the financial press knows... It is so critically important that you understand that money... a lot of money... can be made in the stock market without needing to know (or think you know) what the market is going to do for the rest of this day, the rest of this week, the rest of this month, the rest of this year or the rest of your life. The sooner you quit thinking that the only way to make money in the stock market is to guess right... or be able to read the fundamental tea-leaves... or believe you know what the market and economy will do in the future... the better off you will be.

Foundationally, here is all that is needed to make a lot of money in the stock market:

1. Know where the market is at this moment (everyone knows this), and

2. Know how the market got to where it is at this moment by looking at where the market was, historically, and where it is now, and from that analysis know exactly whether the current market is in a bull-trend or a bear-trend, and

3. Know that it is a mathematical fact that the market will, 100% of the time, continue on its current trend until it doesn't, and

4. Constantly (on a weekly basis!) measure the market to see if it is still on trend or not.

Last week's market action did NOT change any of the above 4 trading considerations. It is important to keep in mind that we do not "invest" in the stock market. No... we trade the stock market. We are ambivalent to the why the market moves one way or the other; we only care to know when it has moved one way or the other. The major trends of the market did not change direction last week. The longer-term trends of the market (as of this writing) continue to be bullish. From a market perspective, that is all we need to know.

So... you might rightfully ask... why the heck did we go to cash last week if the market did not stop its bullish trend? This is the exact question you should be asking... It speaks to the core of how we work to grow your portfolio... It is what separates us from almost all traditional asset managers and it is why you are a client of Turner Capital.

While knowing all 4 of the bullet-points noted above is important, those bullet-points do not address our primary objective for our clients: Grow and Protect Client Portfolios.

As you know and have experienced countless times in your own stock market investments; sometimes you can buy the right stock at the right time and have generated a lot of unrealized gains in those shares only to see those gains evaporate because of market conditions where volatility can wipe out everything in a matter of hours or days.

This is why knowing where the market is and how it got there is important, but capital preservation is even more important. The vagaries of the market cannot be consistently and accurately predicted. The market last week, even with the abrupt sell-off on Friday, did not change the longer-term trends of the market. But... and this is really important... all changes in longer-term trends begins with shorter-term trend corrections. Sure, we could have ignored our Capital Preservation Rules last Friday and with this morning's market booming higher, we could be still in and breathing a sigh of relief. But that was simply taking on too much risk. Capital preservation is all about risk mitigation and locking down serious profits. We captured huge unrealized gains last Friday on our client's behalf. That is good. Now, we sit in higher-yielding money markets waiting to see if/when we get a signal to reenter the market and how (long or short via inverse index ETFs).

The next decision point will be this coming Friday. Could the move in the market this week signal it is time to get back in this Friday? It is certainly possible, but we need to see if our entry rules are triggered. The move up in the market today is nothing more than telling us one of several data points that we look at for making a trading decision. Friday, we will see if the market is signaling it is time to get back in. In the meantime, we are very content to be sitting in higher-yielding money markets on the sidelines. Friday will get here soon enough.

THE NOISE:

Alex Goodwin, Vice President

Stocks and their corresponding indexes pulled back sharply last week, notching their worst weekly decline since May. It appeared that the August 1st tariff deadline had investors hesitant to continue buying, likely fearing for what kind of announcement would be made regarding U.S. trade policy.