Day 79: Get Ready to BUY
The Mother's Little Helper portfolio was up today (+1.08%) for a GAIN of +$6,804.17. Overall gain to date: +$33,080.61 (+5.48%). 76 stocks in the black, 45 are still in the red. This is the third day the MLH portfolio is beating the S&P 500 by a slight margin.
Sorry for the late post, it's 8:12pm California time and I'm caught up in the First Four of the NCAA March Madness tournament. Is it just me or are the bracket charts all fowled up this year because they don't properly display these extra games! There should be an extra bracket for the first four. Where do I complain?
The Thesis Unfolds:
March 10th: Employment numbers came out and they were great. (check)
March 14th: We got a little sell off. (check)
March 15th: We got a 25 basis point increase in interest rates. (check)
March 16th: The market will continue lower. Eventually the banking stocks restart their rally.
So far three out of four predictions have materialized. I'd be happy if the last one just went away, and it very well might. According to the DOW Futures the market should be up at the open in the morning. My thesis for the sell off tomorrow was predicated on investors taking profits after a rally on the Fed raising interest rates, I just thought we'd see more of a sell off before and immediately afterwards; and we didn't. I guess the rate increase was so baked into stock prices and investors heads that the normal sell off was skipped, or it's coming tomorrow afternoon when institutional investors wait for everyone else to run prices up and then they'll sell. Lets watch the close. I think investors got what they wanted and more importantly they didn't get any surprises. The one thing the stock market hates the most is uncertainty, which also happens to be the one thing that is required to earn huge returns.
Look, I'm not trying to convince anyone I have a crystal ball or have some special insight into the markets. My point in making predictions like this is just to illustrate that the markets are not as confusing and mysterious as they get made out to be. The numbers on the ticker tape tell a story about what's going on in the world second by second. Mix in a little geo-political intrigue and a few panic attacks and you get the sausage factory that is the stock market.
Assuming you're invested in stocks and the market does experience a sell off tomorrow or next week; BUY! Have cash ready now and BUY great companies at discounted prices.
If the sell off doesn't occur, I'd look to start taking a few profits where you can. Nobody ever got hurt taking a profit. I'm not recommending you sell out of entire positions, but if something you own has run way up (30%, 50%, more), take 10-20% off the table and hold the cash for when the market does sell off. You're still holding your investments but keeping plenty of cash on hand for new opportunities and just in case you really need some ready cash.
Stay Invested
Clay Baker
