Year-to-Date Strategy Stats as of today:
+ 38.89% : Turner Quant Advantage (TQA)
+ 13.58% : Tactical Growth (TG)
+ 2.13% : Diversified Income (DIS)
+ 18.25% : Leveraged Index (LI)
+ 1.25% : S&P 500
Unless you have been living under a rock, or busy throwing rocks into store fronts (just kidding... I know none of my blog readers would be involved in the anarchy we see occurring in several of our cities), we have a presidential election of epic proportions shaping up for less than a week from now.
Normally, when we get overbought, as we did about 10 days ago, I take us to cash and immediately start building positions in inverse ETFs. The very (very) good news is, I took my clients to cash about 10 days ago and they are all sleeping well at night. I have been promising them for the last couple of months that I would move us all to cash before the election and that is exactly what I did... AND, I told them that I would not put that cash back to work until after the election. That was a promise made and a promise kept. We went to cash almost at the top of this market. Since that top, the market has dropped almost 8%... over 3.5% of that drop occurred today.
So... why are we not short the market? One reason only: The election of the century is next week and no one knows how the market is going to react to a Trump or Biden win. Oh... I know you have an opinion about what will happen; so do I. I think if one side wins, the market will rebound nicely. I think if the other side wins, the market will flounder and then fall if Lucy doesn't come through with a relief bill. Lucy has been fooling Charlie Brown for months regarding the relief bill. She kept setting that football and Charlie Brown (the public) would believe her and at the last second, she would pull the football away from the tee and Charlie Brown would fall flat on his back... time and time and time and time again.
Now, that analogy would be humorous if it were not so devastatingly bad for so many thousands of small business owners and out-of-work families. Personally, I think the bait-and-switch routine that Lucy has been playing (for political reasons) is simply egregious. A relief package needs to get out of Washington now!
But, it won't... not until after the election. Lucy will do nothing that can be of any value to a Trump reelection regardless of how many financial lives are ruined.
But, unfortunately, that is water-under-the-bridge. The market has finally come to the realization that fiscal stimulus is not coming any time soon and it looks like COVID-19 is back on the rise; maybe big time. Does this mean another shut-down is in the offing? Who knows... and that is the reason for the "Why not now?" title of this evening's blog.
As you know by now, I am a big believer in going to cash when risk of a reversal in the trend of the market is high. This coming Wednesday, we may see a massive reversal in the current down-trend of the market... or, it just 'could' be that the 8% sell-off we have seen over the past few weeks is nothing more than the tip of the iceberg. The better course of valor is to simply take a wait-and-see position; at least wait until next Wednesday.
Because a lot of investors (traders) believed that Lucy would not trick Charlie Brown again, they have been holding on to their great stocks (and, in some cases buying what they perceive to be, great bargains)... but those great stocks are getting decimated and as mentioned above, the market may just be getting started on its downward trend (crash?). Some of those bargains may soon have even better bottom-basement prices. I am not suggesting that the market is about to crash, but I am suggesting that we will have a ton more clarity on the trend of the market come this next Wednesday.
Normally... I would be short right now... but this election coming up is NOT normal. Sometimes (and you know deep down in places you don't talk about at parties), not losing a lot of money is far, far better than making money. Right now, not losing money is the plan and I like the plan. I will reassess next Wednesday.