03-25-2021: Bottom of the Ninth... 2 outs??

Do I believe this market is in the ninth inning? The data seem to support that conclusion.

Does that mean there are 2 outs and the batter has just hit a simple fly ball to center field? That, my friend, is not clearly defined in the data.

This ninth inning could run for several more weeks, months or 'maybe' just a few more days. But, to pull the plug and go whole-hog into inverse ETFs right now is just not smart and way too risky.

I know you are (as am I) frustrated with the recent losses, but it is important to keep in mind that those losses have been minor, from a percentage basis. Last year, the TQA model, which ended the year, up over 48%, had a loss in one month of nearly 10%. Tactical Growth, which ended the year, up 18%, had a loss last year of well over 10%, over a two-month timeframe. And, our LI model (Leveraged Index) had a huge loss of over 15% over a 3-month time-period and ended the year up almost 30%.

It is still very early in the year and this market has been floundering around without any particular bull or bear trend. No one can make a lot of money in a floundering stock market; not consistently. Certainly, there have been specific stocks with strongly bullish trends in this market, and we have looked to capitalize on them; but just about the time those stocks begin to pay off, the market would drop several days in a row, and those hard-charging stocks would hit their stops. Then, the market would catch its breath and move back up.

In an effort to adjust to this whipsawing market, we widened stops to reduce the number of early sells, but as you know that is taking on a lot more risk; especially in a top-heavy market. My number one job is to keep my clients from losing a "LOT" of money and as such, leaving stops too wide just puts too much risk that the next move lower in the market will not see a sudden reversal to the upside; and those wider stops would hurt client accounts more than I find acceptable.

The data now clearly point to a flat, whip-sawing market that is the anathema of a trend-based investment strategy (I spoke about this in this morning's blog). Today, a lot of our holdings hit their stops and while, for the most part, the losses were small (on a percentage basis), some were not. But, we ended the day with some great gains in many positions.

Our DIS model knocked it out of the park, moving up +1.12% with an average gain of +1.31% per holding. This model, which is fully invested for another week, is way ahead of its benchmark and well on its way toward reaching its goal of +10% for the year. Keep in mind this model is an income-based, dividend-harvesting model and is not a growth model. [The reason that I said, "... for another week..." is that almost all of the holdings hit their ex-div dates next week and per our dividend-harvesting strategy, we will be looking to exit each position at our basis as soon as the market permits.] This model is up +2.82% for the year.

I now have our LI (Leveraged Index) model in 100% cash as we wait for a market trend to develop. We are ready to take advantage of a bear or bull market trend, but will wait until we can see a well-defined trend develop before deploying that capital into the market. And, when we do, we will be using wider stop loss settings to help avoid whipsaws that are so prevalent in this current market cycle. This model is down -6.68% for the year.

Our TG (Tactical Growth) model ended the day with an average gain in the remaining positions of about +1.42%. We are not in a big hurry to put more capital in this model to work until we see a more reliable trend develop. This model is down -2.77% for the year.

Our TQA (Turner Quant Advantage) model ended the day with an average gain in the remaining positions of about +2.50%. We will wait for the market to indicate a strong bullish trend before putting more capital to work in this model, and if a bear market trend develops, we will be moving into 2x inverse ETFs with very wide stops. This model is up +0.24% for the year.

In closing, please keep the following in mind... As much as you want to never see even a small percentage loss in your portfolios (and, neither do I), it is impractical to assume that your portfolios will never suffer small losses and will always and only move higher. Looking back (Monday morning quarterbacking), we can all see the perfect time that we could have moved to cash at the very top of this current market. But, there is no model and nothing other than a guess that would have instigated such a move.

Know that my team and I are totally driven to grow your capital and to protect it from significant losses. So far, we have done a good job of that; and, we will be doing our best to do better in the future. Some of the highest profile investment firms and high-flying ETFs in the world have lost a ton of money this year. One example is a well-known ETF that was up over 300% last year and is now down more than 27% from its 2021 year-to-date high. Some others have lost over 50% so far this year. I mention this so that you can keep our small losses in perspective.

You and I are in total agreement that any loss is simply NOT desired. But, small losses are inevitable. If this market will move into a decent trend, these small losses will fade into a distant memory.

Recent Posts

See All

03-30-2021: What IS Working...

Yes, I know... the market is just flopping around and going nowhere. And, for our growth models (Turner Quant Advantage, Leveraged Index and Tactical Growth), we need a trend more than anything else.

03-28-2021: A Fork in the Road?

I remember, growing up in small rural community where my dad tried to run a farm and a construction company at the same time. That meant there was always more work to do than there was time to do it.

Turner Capital

Call Us! We are the money management firm you have been looking for!
Quant-Based, Market-Directional Portfolios


Austin, TX

©2021 Turner Capital Investments. All Rights Reserved.