So much of investing is a process of elimination. I know, all the headlines these days scream “what to buy right now.” That’s exciting. It just lacks context. Which in my experience is what costs DIY investors years of profits, when markets shift their attitude. And I think that’s happening more each week.
These days, the results of my research are often that I look for opportunities in places where, as it turns out, they don’t actually exist. That takes time. My time. And hopefully, our paid subscribers make that connection.
I am, when all is said and done, an outsourced investment research analyst to those folks. So they can take what I’m saying, 40 years into doing this type of work, and decide for themselves what matters.
I think that’s worth repeating here from time to time. Because trading, and especially investing, is not simply about “picking winners.” It is about developing a PROCESS, through repetition and experience, that allows you to make faster decisions over time.
Investors ask the same types of questions, and make the same types of decisions, over and over. Eventually, if they work hard, they reach the point where it becomes what I’ve referred to in some of our live subscriber sessions as a “twitch response.” That’s similar to what helps a professional baseball batter decide in about 1/4 of a second whether to swing at a pitch or not. Some aspects of investing and trading are just like that.
There are 8 questions I ask myself about the many ETFs and stocks I chart, multiple times a week, in part to prepare Fresh Charts posts.
Should I keep an eye on this, so that one day I might buy it? (watchlist)
Should I buy it now? (portfolio)
How much of it should I buy now? (portfolio management)
Should I keep an eye on it, as I might need to sell it soon? (defense-first mindset)
Should I sell it now? (portfolio management, again)
Is part of why I’m selling it because I’ll replace it with a better one? (upgrading)
Am I selling it but do not have an immediate replacement for it? (defense, again)
Should I sell all of it, or just some of it, and why? (position-sizing)
That’s it. That’s 33 years of learning how to manage other people’s money, 27 of those years as a fiduciary. The past 6, as a researcher, coach and model signal manager.
Have you ever wondered why people pay for someone else’s ideas, that list of 8 decisions, which a professional money manager makes, over and over again, all year, every year? THAT is what they are paying for.
The issue I’ve found since “they let me out of my cage” 6 years ago, when we sold our advisory firm and I had more freedom to speak my mind, was that may DIY investors do not realize that. They want to “do it themselves” but they are operating on the assumption that the stock market will go up forever, without the life-altering bear markets that cost people a decade or more of retirement planning progress. It happens in every cycle. I’ve seen three of them. We have not had one since 2008, and that’s a long time.
But those investors are challenged every day. There are constant obstacles put in front of them. The markets themselves are driven by mechanical forces that those who trained in the 20th century did not face.
Algorithmic trading is like the 7’6” basketball player that you know will be waiting for you, every time you drive to the hoop. You can still score, but you’ll need to account for where he is, and what he’s doing. And you don’t have too much time to make decisions.
So to me, it makes a lot of sense for DIY investors to either learn more of those 8 skills (portfolio management). And/or learn by watching someone else make and explain those decisions.
ROAR Flex / Hedged Bond model portfolio updates
At ETFYourself.com, we have you covered either way. You can read my ongoing “blog-style” thoughts here for $200 a year, or you can sign up to access one of our model portfolios. Over the next week, you’ll hear from us about how to access those models, either with trading done for you, or where we deliver the “model signals” to you to manage yourself.
As a reminder, the ROAR Flex portfolio is up and running. This is my “best thinking” tactical portfolio, spanning ETFs and stocks, aimed at producing long-term returns beyond that of “moderate risk” portfolios, with low volatilty.
If you are interested in learning more about ROAR Flex:
Email us: Info@SungardenInvestment.com
And for the many of you who have been asking about different ways to access it, we have been working as quickly as possible to, as the old Burger King commercials said, “have it YOUR way.”
But wait, there’s more! (he said, in Dad joke fashion)
As our long-term subscribers know, ROAR Flex is the second largest part of my family’s personal portfolio. The largest part is a bond ladder. And now, I’m bringing a version of that approach to our subscribers. More on that very shortly.