"Turner Capital Total Market Index" (TMI) a tool-kit and financial partner to grow your wealth and reach your goals.
This morning, the market opened way up. While the world is all consumed about the why and will it last, our methodology simply follows our rules for when to be in the market (we got in 3 weeks ago) and when the market HAS moved against us enough to trigger an exit. The "WHY" is irrelevant. What is relevant are the entry/exit rules.
The key in our approach to growing capital in the stock market is to eliminate emotion and replace it with rules. Are our rules the end-all-be-all rules for successfully growing strong gains in the stock market? On a day like today, it's hard not to say, emphatically, "YES!" But we know not every day will be up like it is at this moment. When the market drops against us, do we say that our rules are no longer the end-all-be-all rules for successfully growing your capital? No... to jump up and down about a great day in the market is an emotional event. Thinking the world is coming to an end on a bad day in the market is also an emotional event. The key is, to the best of our abilities, stay unemotionally detached from the day-to-day movement of the stock market.
No... not at all. But the last thing we or you want to do is to be swayed by emotion when looking for an unbiased, rules-based methodology that puts us all in when historical testing of those rules have indicated it is, more likely than not, a good time to be in the market or, when appropriate, out of the market.
This is also why we look forward to bear markets just as much as bull markets (from a rules perspective). Granted, from an emotional level, most investors love bull markets and hate bear markets. Our rules only care about one thing... Trend identification. If the trend is bullish, like it is now and started about a month ago, we want to be all in the market and taking advantage of the bull trend. If the trend is bearish, we want to be all in the market and taking advantage of bear trends via inverse index ETFs. There are few times in the life of a stock market investor that are better than when the world is panicking and gnashing their teeth in the midst of a massive bear market, and you are making money hand-over-fist in inverse index ETFs. That is exactly how unemotional rules are 'designed' to work.
Will these rules "work" exactly as designed all the time? Yes! Will the rules ALWAYS result in a profit? No! Just because we have rules to put us in the right market at the right time, does not mean that the rules forecast what the market will do next. Sometimes, the market will signal our rules that it is time to go all in on the bullish side and then suddenly, the market changes direction, generating a loss in our trade. Does that mean the rules didn't work? No. Does that mean the rules need adjusting? Maybe... it all depends on how consistently the rules got us in or out at the wrong time. This takes a LOT of back-testing to determine the level of consistent success or failure of the rules and the historical market. This is our on-going and never-ending job.
But for right now? The rules appear to be working perfectly. We will stay in this all-in mode until the trend changes and moves enough lower to trigger our exit (which is already identified). We know exactly where we will exit this run if the market moves down enough to reach that exit level. You clearly know that the market has volatility. You clearly know that a move lower, by itself, does not mean the overall trend has reversed into a downward trend. The key is having a rule (multiple rules, actually) that tell us it is time to move back to cash to wait for the next trend to develop.
We have those rules and it is our job to follow them explicitly. It is also our job to continually test those rules against historical markets to look for and identify any rule adjustment that will improve our ability to know when to be in the market, how to be in the market and when to be out of the market. We never stop this process.
Alex Goodwin, Vice President says:
"The markets endured a choppy last week as optimism from strong earnings collided with renewed tariff anxiety and cautious Federal Reserve messaging. Economic data released during the week delivered mixed signals. While the ISM Services PMI showed healthy growth in April, the prices-paid component surged to a two-year high, raising concerns that tariffs could reaccelerate inflation. Ultimately, after a historic nine session winning streak, the S&P 500 and Nasdaq both ended slightly lower for the week, slipping about 0.5% and 0.3% respectively.
The Federal Reserve held interest rates steady at its May meeting and struck a “wait-and-see” tone, citing increased risks from both inflation and slowing growth tied to trade uncertainty. Chair Jerome Powell emphasized that the Fed was in no rush to raise or cut rates, once again ignoring Trump’s calls to cut rates immediately. The Fed’s neutral stance initially rattled markets but it appeared to be a momentary reaction as markets finished the day in positive territory.
Finally, some good tariff news over the weekend as the United States and China struck up a 90-day tariff reduction agreement. This agreement aimed to ease trade tensions between the two leaders in the global economy. The U.S. agreed to lower tariffs on Chinese goods from 145% to 30%, while China reduced its tariffs on American imports from 125% to 10%. This news combined with the prescription drug cost reduction announcement from President Trump boosted stocks higher as the markets continue to recover from their first quarter slide.
You know by now that we are fully invested in bullish ETFs, and of course, we are enjoying this move higher. But what we don’t know yet is if this push is noise driven or trend driven, however, the close on Friday will determine that for us. As usual we will be waiting until Friday to determine where the market is and then use that data and our rules to make our decisions."
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