The 3s Report: Bottom of the Ninth?
From timely to timeless, the 3 most important points we can make about stocks, bonds, ETFs, markets and investing...updated weekly
ROAR Score weekly update
Our "Reward Opportunity and Risk" (ROAR) score remains at 10 for the sixth straight week.
This means a 2-ETF portfolio that can only be allocated to SPY and BIL would be 10% SPY and 90% BIL.
That little "underdog" 2-ETF portfolio, simple as it is, has weathered SPY's 8.5% decline since 2/19/25. It is down 1%, and is now ahead of SPY on a 6-month trailing basis.
3 Quick Thoughts on markets
I feel like we were just here. Because we were. This is a weak market, driven by a range of factors that all boil down to money flowing out of where it has poured into the past 2 1/2 years: S&P 500 and Nasdaq 100 index funds. That's a tough train to stop in its tracks.
Still, I do not put it past this market, and more specifically this set of market participants, to summon their "animal spirits" yet another time. That's why the ROAR Score remains at 10, and has not dipped to zero.
Pulling from my endless closet of baseball analogies to investing, this stock market is like the bottom of the 9th inning, the home team is coming up to bat, and they are down by 3 runs. Have they lost? No. They simply need to get 3 runners on base, and have one of their players hit a grand slam home run to win the game. Or, string together a bunch of hits and score 4 runs, or at least 3 to keep us waiting patiently to see who wins.
3 ETF (or index) charts I’m watching
I know there's a lot of talk about the market "broadening out" from the Magnificent 7 stocks. But I don't see much evidence that dividend stocks will be part of that, or if it will happen at all. In other words, it is more likely a narrative being pushed by people who get paid to retain and attract assets under management. The classic Wall Street gig.
Nothing says "I'm not ready to decide which direction I'm going" quite like this chart, which tracks an ETF that owns the Mag-7 plus 3 additional popular stocks. This will resolve one way or the other soon, and that will say a lot about the whole market's reward/risk tradeoff.
Commodities are still looking pretty good to me. But not so good that I've jumped aboard PDBC, which is my typical go-to for broad commodities exposure. I am more likely to move ahead on this one if/when it shows more than modest upside potential. It looks more like a 5% gainer to me than a 10%-20% profit potential. The weekly chart (not shown) is a big factor in that conclusion.
3 stock charts I’m watching
Cell tower REITs like AMT look pretty good to me, relatively speaking. I don't own this one, but I do own CCI...with an option collar around it, of course.
I had this one collared, but bailed on it when I came to believe that it was more likely to move lower. I had the protection of the puts I bought with it, but while that limits losses, I'd always rather have "live money" that has a chance to appreciate than "dead money" where I don't gain anything until the stock moves up above my put strike price.
My gosh there are a lot of jacked up bulls on this stock (PFE). A dividend yield in the upper 6% range is attractive, but the stock has gone nowhere for years, and more recently was cut in half. That makes it attractive at first glance, and fundamentally (very low trailing P/E multiple). However, the chart brings me from WHAT (to consider owning) to WHEN (own it now)...but I'm not at WHEN yet.
Final thoughts for now
Wednesday is tariff day. At least, it is due to be, in some form, though it might not be the end. Or maybe it is. Or maybe not.
That's the standard investor's quandary these days. But I think folks should skip right past it. Ignore the headlines, and pay more attention to:
Price movements informing us of where the reward and risk are
Active risk management (option collars, inverse ETFs, tactical moves, whatever one's preference is)
Learning about the 2 key items immediately above
That's what we do HERE. Sungarden YARP Portfolio on Seeking Alpha is not a subscription service in the traditional sense. I am not sitting in a proverbial ivory tower, telling everyone what the market will do, and how confident I am in my ability to predict the future.
I am but a risk manager, with lots of experience in markets that drive people nuts. Like the one we find ourselves in 2025. Our weekly live sessions for subscribers are fast-moving, education-packed and highly interactive. That, the 24/7 chat room we have, and the access to the regular stream of investment research coming from Sungarden are are all part of the experience.
Is the least expensive investment research service? That depends. What is "expensive" to you? If $1,500 a year to be part of a group where people learn to avoid common misjudgments, become more aware of how modern markets actually work (for and against us) and to interact with like-minded investors and me more directly is expensive, that's each investor's calculation.
But what I've seen over the years is that people try to assign everything to the "cost" column when evaluating how to navigate rough markets. So I'll offer this example:
If an investor has $40,000 in an account that is not otherwise accounted for, or that is waiting for the "right" investment opportunity: an investment of $38,500 in 1-year T-bills currently around a 4% yield will return about $40,000 in 12 months' time. That leaves $1,500, which will be earned in T-bill income over that time. If an investor joined our group at Seeking Alpha for a year, that's what it would cost them.
So, that's one way that anything...including a 1-year investment in joining our group...can be funded. If the investor got nothing out of it for a year, they'd end up with the same $40,000 they started with. More likely, they will get a window into the type of risk-managed investment approach I have used for decades, now for myself in semi-retirement. And best of all, they can take what they learn and apply it themselves. This is not an advisory service, it is a research service.