THEY’LL COME IN THROUGH THE WINDOW AND ROUST YOU OUT OF BED. THEY’LL WHISPER IN YOUR EAR. THE TALES WILL BE HORRID AND SAVAGE AND THE FEAR WILL COME–RIGHT AFTER THE SUN. YOU’LL NEED A MIRACLE. THE END HAS COME AND YOUR OASIS IS NOW SUDDENLY A SCREECHING FREEWAY LEADING DIRECTLY INTO AN APOCALYPSE, A RESPIRATOR, AND A PORTFOLIO HEART PUMP. NONSENSE. YOU’RE JUST TUNED INTO THE WRONG RADIO STATION.
are not built with a mallet and a cork screw. But they can resemble either. Two weeks ago we awoke to a giant bag of new client money right on our desk. We’ve been very busy. STOCKjAW has been burrowing deep in the trenches of foundation-up portfolio construction. From the beginning it’s proved a thrill. As any investor will tell you, portfolios are very personal entities. Suitability matters. Stocks are like pets. They mirror their owners.
When beholding our own portfolios, we are glimpsing distinct reflections of our selves–bullish, bearish, balanced, or bold.
The incredibly generous bull we’ve been riding for ten years is now the oldest in history. But then, so what? Age has never determined the life of any bull. Disease kills, not age. Sick or healthy, economic fundamentals decide–unless geo-political events drop from the clouds like some hissing bomb.
Following thousands of days of pure raging health, our market will now be relentlessly targeted as a trap-door.
The financial media machine cranks constantly. That’s what they do. Monkey managers will furiously call for “repositioning.” That’s what they do. “We like the financials here” they’ll quack. Fact. Monkey managers like the financials everywhere. Any viewer of CNBC can tell you about the string of monkey managers detailing shifts in market conditions, and the portfolio accommodations those conditions demand. Hum. Really?
Following fund manager’s sector rotation advice is a fools game. Fund managers are forced to dance to the concerns of institutional investors. We are not.
The ceaseless gyrations of monkey managers have almost nothing to do with actual returns. Monkey managers are hand-holders and nerve doctors. Calls to rotate reflect the sparking sphincter panic of CalPERS and fund administrators. Besides, fund managers are actually selling, not telling.
What then are sector rotations? Rotations create share price damage. When big money moves out, share prices drop, providing one of the best opportunities for individual investors to buy quality at discount prices.
Hoping from boat to boat creates only cost and confusion–to you. Fortress stocks remain, whether you do or not. The immutable reality remains. No one knows what’s next. Buying quality, at great prices puts the individual investor in the very best position the market can offer. Constant sector repositioning will never provide absolute protection, or superior returns. Constant sector dancing ensures only inferior returns, and more business for the very managers selling such nonsense.
Buying only the best at a killer entry point remains the very best risk/return tool going. Playing “sector rotation” is monkey management business, not investing. You will often find quality floating in the bubbling wake of big money’s temporary dumpage.
Roll with volatility, and keep your bucket upright.
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