Year-to-Date Strategy Stats as of COB today:
+30.08% : Turner Quant Advantage
+ 8.70% : Tactical Growth
- 0.10% : Diversified Income
+ 5.65% : Aggressive Growth
- 4.94% : Total Market
Today was another huge day for all of our portfolio strategies. My clients are benefiting from our management of their capital, but are you?
Some of the readers of this blog are not a client of mine, so this note is directed more toward them than my clients. But... I know several of my clients only have a portion of their capital with me and you (and they) may be thinking, "This market can't keep going higher... a crash just has to be on our doorstep!"
Of course, you could be right. And, one of these days, you will be right. But, you weren't right today. And, I doubt that you will be right tomorrow... With Lilly's announcement of an antibody treatment that may prevent COVID from spreading inside nursing homes; the much better-than-expected ISM's PMI rising to 54.2 in July; and one company after another beating earnings' estimates in record numbers and on pace to set the highest rate since 2008.
And is there anyone who doesn't believe the Dems and the White House will eventually push out another trainload of free sugar.
So... if you are on the sidelines, waiting for the much expected bear market, why? Maybe you are thinking that it's too late to get in; that it's getting way too close to the top? Of course, you 'could' be right. Today, our TQA model moved up almost 2.5% with gains in several positions of 5% to over 8%. I am guessing that the investors pushing the market higher and our holdings higher, do not believe we are on the precipice of a market crash. But, you know and I know, they 'could' be wrong and tomorrow could see the collapse that we all expect will happen sooner or later. This is why we have stops on all positions, just in case the top has been reached.
If you are a fence-sitter, you could be right. As for me, I know that if I was personally putting new money to work, I would not hesitate to get into this market and not worry at all about how close we are to the top. Why? Because, we may not be close to the top and if we are, I know we have a plan already in place to get into our bear market strategy. I wouldn't want to find myself waiting to get into the next bear market with the same logic... that it's too late to get in (again). Waiting for the 'right' time to get into the market is known as 'analysis paralysis' and it is the primary reason why most investors get out at the bottom and get in at the top.
My advice is to find a methodology that you can believe in and then ride that strategy without trying to second-guess yourself. I would caution against a buy-and-hold methodology. While this is one of the most used methodologies by professional advisors, it tends to be a lazy way to invest and has almost unlimited down-side exposure in bear markets. I also do not ascribe to active management strategies that have the goal of "losing less than the market" by holding stocks (or <shudder> mutual funds) that do not lose as much as the broader market in bear market cycles.
I prefer (as you might imagine) a strategy that is bullish in bull cycles; goes to cash in transition markets; and, is bearish (using inverse ETFs) in bear cycles.
Now... having said all of the above, I want to be very clear that I am NOT recommending you start buying stocks hand-over-fist without a clear exit strategy in case today was the very top of the market. And, you should always assume every day is a market top by keeping your stops updated. You should always hope for the best, but plan for the worst. It is extremely important to know whether the market is bullish, bearish or neutral. It is equally important to know if any position you buy is also in sync with the market.
The bottom-line is this... There is no bad time to get into the stock market as long as you know your downside risk and you have risk tolerance to handle that risk, and financial wherewithal to support investing in the stock market; and, of course, if you have a sound investment strategy.