10-09-2020: The Anti-Worry Strategy

Year-to-Date Strategy Stats as of today:

+ 40.35% : Turner Quant Advantage (TQA)

+ 13.51% : Tactical Growth (TG)

+ 2.15% : Diversified Income (DIS)

+ 17.97% : Leveraged Index (LI)

+ 6.69% : S&P 500

As much as I hate to admit it, I 'sometimes' enjoy watching and listening to CNBC. Joe Kernen is my favorite host among the many they have. He seems to be the least liberal and the most level-headed.

But, I rapidly tire of the incessant and ubiquitous mantra that if you hear enough opinions (aka, "professional guessers") about this stock or that stock or what Trump said or didn't say or whatever the news of the day is, that you will, somehow, be able to become a smarter, better informed investor that will make your trades more profitable.

In reality, you do not need to hear any of those opinions to be a very successful investor; and, I generally mute the pontificators (except when I find them so ridiculously stupid that I do listen for entertainment value) most of the time. It is not that I am so smart and they are so stupid. No, that's not the reason. It is just that my opinion (anyone's opinion, actually) is no better or worse than any of the opinions you hear on most of these so-called financial news outlets. An opinion is simply another word for, "guess". Anytime you hear someone start a sentence with, "I think..." or "I am sure that..." or "Everyone knows that..." or anything like those preambles, you need to substitute those words for, "I am purely guessing here, but I think..." I would have a much, much higher opinion of the people making these statements, if they would simply say, "I have no idea for sure, but my best guess is..."

I suspect this is why I will never be interviewed on CNBC... When the interviewer inevitably asks, "Mike, you are known as a market trend investor. So, tell the audience where this market will be after the election?" My answer would be, "I don't know and I don't care. I am not the least worried about it, regardless of the direction it moves." They would probably immediately cut to a commercial, but they might be insightful enough to ask, "How can you possibly manage your clients' capital and not care where the market will be in a month?!" Now... THAT is an intelligent question... I long for the opportunity to answer that question. If you have read any of my books or listened to enough of my presentations, you already know the answer. 99% of the investors in the world, however, do not know the answer. I call it, "My anti-worry strategy."

If given enough time, my response to the question would be this: "I don't care about the management of any company. I don't care about any of the products in the pipeline of any company. I don't have to guess who will win the upcoming presidential election. I don't have to worry about the GDP or unemployment numbers or what the Fed will do or not do. I don't care if gold goes to $3,000 an ounce or drops to $300 an ounce. I don't hang on every word that comes out of Jim Cramer's mouth. I don't care one whit about any opinion of any analyst or market watcher. I only care about one thing and that one thing is totally clear and requires zero guessing about. I only care about the current trend of the market and I know, with mathematical certainty, that the current trend in the market will continue until... (you know the next words, don't you?)... it doesn't. So, all I have to do is measure when that 'doesn't' HAS occurred. I will invest according to the trend of the market. I am bullish when the market trend is bullish. I am bearish when the market trend is bearish. Nothing else matters and what's more, I never have to worry about what will happen in the future because the market is never wrong and it is perfectly measurable."

At this point the interview would end and I would never be asked to return. I do not fit the mold of "You can't be a successful investor if you do not know, with a high degree of confidence, what the future will be for the economy, a public company, or the political world around you." That mindset sells financial publications and keeps CNBC and Fox Business on the air. It keeps thousands of analysts employed. It perpetuates the myth that you can out-guess the future with enough success to be successful. Or, you have to drop back into a buy-and-hold mindset and stick your head in the financial sand and ignore the market; assuming that your stocks will eventually move higher if you live long enough.

I am here to tell you that reading opinions about what may or may not happen in the future; or watching financial shows to 'somehow' gain some insight about the future that will make you a better (more profitable) investor, is an effort in futility. As for buy-and-hold... Yep... that works if: 1) You don't care if your lose 50% or more from time-to-time; and, You don't care that it can take decades to get back to even; and, You will live forever (to give your money enough time to recover and someday make a profit); and, You will never need the money (Why? Because if you use the money, you have to sell and that is not buy-and-hold).

Here are the facts and they are undisputed:

  1. Other than God, no one knows, for sure, what the future will be.

  2. You can precisely measure the historical pricing data of indexes, ETFs and stocks.

  3. You can plot historical data to precisely measure the current trend of the market or any publicly traded equity.

  4. All trends will continue until they stop.

  5. You can precisely measure when a trend has stopped.

Armed with the above, you need never worry about what will happen in the future, at least with regard to the stock market.

In closing, let me add that I full-well know that all of us hope for a better future; whether that future be health-related, country-related, family-related or stock-related. But, hope is not a good investment strategy. I hope every trend that I find, continues forever, but I know that trends will change (sometimes abruptly) over time. It is my job to know as soon as mathematically possible, when those trends have changed. This is not an easy task; it takes no small amount of work... but, that is why you have hired us. You have hired us to do this work for you and we do work very hard at that task.

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