The S&P 500 was down -15% for the week; the worst week in the market since 2008. The Dow was down even more. The S&P 500 for the year is now down almost -29%.
All of the Turner Capital strategies made money this week. Let me state that again... All of my client accounts made money this week when the typical buy-and-hold, mutual fund strategy lost a ton of money.
Today, about 30 minutes before the market close, I moved all portfolios to cash. There is no telling what news can come out this weekend that could roil the markets on Monday. It is quite likely I will be right back in the market on Monday, but the safer play is cash over the weekend.
While I have some of my clients wanting me to throw caution to the wind and stay 100% short the market, my data simply do not support that amount of risk... not until we get a full-fledged "TIP Alert". This weekend, we'll be getting our 2nd "TIP Warning" that signifies that the 200-day moving average has moved lower for 2 consecutive weeks. If the 200 dma is lower again next Friday, we will have moved into a full-on bear market investment bias. At that time, I will have more freedom to be fully invested in inverse ETFs. [A TIP is a "Trend Inflection Point" on the Total Market Index 200-day moving average.]
Now, you may be thinking... duh... Mike, don't you realize we are already in a full-on bear market? What I think doesn't matter. What matters are what the data are showing, and despite the fact that the market has tumbled into bear market territory (down 20% or more), the 200 dma (which is one of the major trends of the market) is just today, showing only the 2nd week of being lower than the prior week. In my world, for a bear trend to be in play, the 200 dma of the market has to be lower for a minimum of 3 weeks in a row. It is at that point, the bear trend (at the 200 dma level) is in play.
The good news is this... when the rest of the world is losing money hand-over-fist, Turner Capital clients have been making money. Generating a profit when the market is cratering is no small feat, but it is the objective we have with our market-directional approach.
As an aside... A client sent me a copy of an email report they get from a buy-and-hold advisor. The advisor makes a valiant effort to say (in so many words), "everyone is having a tough week and so it's ok if his portfolios are down, too." This is the siren song of every buy-and-hold (and value) investment firm out there. They make one excuse after another regarding why you should not be upset if you're losing money. Most of them would like to say to you, "Everybody's losing money; you're losing less than the market... so shut up and don't call me complaining." This kind of market is why clients hire Turner Capital. Our goal is to grow capital in bear markets and while this is not easy to do, it is far better than letting client capital get decimated by holding on to great stocks (Boeing comes to mind) that are dropping like rocks. BA may be a great company to own at some point, but not in a crashing market. I wouldn't want to own a single stock, regardless of how great it has been, in a crashing bear market. The risk of loss is just not worth it.
Let me leave you with one final thought... for the money you don't have with me to manage... "If you had the cash in your hands right now, instead of the shares of xyz, would you buy xyz right now?" If the answer is yes, then xyz 'might' be worth keeping. If the answer is, no, then you should think long and hard about keeping that stock or ETF or CEF or mutual fund. If it's not good enough to buy right now, the odds are pretty high that it's not worth owning right now.
Have a great weekend. Stay safe. Avoid getting out among the people. Assume everyone is infected with the China coronavirus.