Breathe in, Breathe out, Zoom Out

 By the way, there is a huge shift / sector rotation out of “speculative tech” (companies that aren’t profitable) into cyclicals, defensives. One will never know when the stock markets will hit a bottom but it looks likely to have a “mini-capitulation” of another 10% for the S&P500 in late March before recovering sharply. Monetary policy is still very expansive, which long term is good for stocks. Remember, stock markets do not move up in a straight line. They go up and down, higher highs, higher lows. If you are worried by the daily fluctuations, zoom out from daily into weekly charts and you will see a bigger picture.

 

MSCI World ETF. Daily chart. Very noisy. You can see it is vaguely rising. 150 days and 200 days MA rising gently.

 



 

 

MSCI World ETF weekly chart. Looks less noisy. The trend looks up. Now we can see a pattern. 150 and 200 weeks rising. There were 2 chances to buy, in Nov – Dec 2018, when it briefly dipped below the MA. In Feb – Mar 2020, when it drastically dipped. 2 big buying opportunities in 2 years.

 



 

The S&P500 monthly chart shows buying opportunities from 2003 – 2004. 2008 – 2009. Briefly in 2020 March when it dipped below the 50 months MA. When we zoom out for the chart, we will be calmer, be ever ready to buy on dips. The trend has always been up for stocks as money has always been printed.



 

There were 3 stages of the rally from Apr 2020 to now.

 

Stage 1: stay-at-home stocks outperformed. Tech companies like Zoom, Amazon, Alibaba staged a huge rally from Apr 2020 to Feb 2021.

 

Stage 2: Old economy stocks start to recover from Nov 2020 till now. Schlumberger, energy sector, REITs, utilities. Tech also recovered from Nov 20 to Feb 21. There was an overlap of 3 months where both sides recovered but there was a quiet changing of guard. The tech rally lasted 10 months.

 

Stage 3: Speculative tech like Tesla, NIO, falls 20%, QQQ (NASDAQ ETF) corrected 10%. But the old economy stocks continue to rally from Mar 21 onwards.

 

I suspect the old economy rally can last 10 months, from Nov 20 to Sep 21. Does that mean I’m abandoning tech? No. I’ll be buying good companies that will continue to grow as long as they are at 150 / 200 days Mas, e.g. Amazon, Alibaba, Adobe, Salesforce, Merck (our CONVICTION LIST). However, I’ll be increasing my weights into lagging sectors, e.g. energy (Blackrock World Energy), Financials (DBS, UOB, JPMorgan Chase, Bank of America), Materials (Blackrock World Mining). I won’t pick individual stocks for energy and mining, instead, I’ll pick funds to overlay my strategy.

 

Perhaps stage 4, we could see both tech and old economy stocks rally from Sep 21 to July 2022. You’ll never know. Always remember, keep 10 – 20% cash. Buy aggressively on dips especially when they correct to the 150 or 200 days. When something is overstretched, and your cash pile is running low, it doesn’t hurt to take profit. I’ll be buying back some ARK ETFs when they correct another 5 to 10% from current levels, but that’s for me.

 

 

 



 

Comments

  1. Anonymous9 March 2021 at 03:26

    I concur. I have been looking at the same list in stage 3, with 9988 instead of BABA, without energy & mining. Wondering if ARK ETF would be ARKK or ARKF. RW

    ReplyDelete

Post a Comment

Popular posts from this blog

My Funds Portfolio 14 Jan 2021

Image
  Below is the overall performance of my funds. For CPF, I put everything into funds. I refuse to buy SGD stocks because you should see the performance of MSCI Singapore below. In the last 1 year, the performance was down 5.9%. it is only this year that the performance went up slightly but it is still down. If I had used my CPF and cash to buy SGX listed companies I would have done at best 5% even with superior stock picking.   Look at the other indices. MSCI world is up 16.1%, S&P500 is up 18.0%, China is up 38.6%, Europe up 6.2%, MSCI Asia ex Japan up 28.2%. NASDAQ was of course the best performer with 44.7%. So the growth is NOT in Singapore. It is either in the US or Asia, mainly China. Even the best companies from Singapore are listed in NASDAQ, e.g. SEA Ltd. We have become the “forgotten man” or “sick Man” of Asia in terms of stock markets.       The average performance of my funds are 25.8%. this is unrealised return and doesn’t include realised gains. I’ve held them through
Read more

Lessons in Life

 I've worked with lots of people. Some are my good friends. I thought we could collaborate together. But somehow, maybe they found better opportunities elsewhere, decide to cast me aside and work with others. Some, don't add value but still want to be my equal partner. Others, limit their collaboration with me, denying me other opportunities.  The best way to act is to show every inch of gratitude I can to everyone. First, the one that opens doors and work with me wholeheartedly, I shall wholeheartedly contribute and ensure that the pie is greater than not dividing with me and working alone.  For those who opened a door and then decide to limit collaboration, I shall still be thankful, have gratitude. Whatever someone gives me in good faith, no matter how little, I shall still do my best.  For those who shut the door, I bear no grudges for I am thankful we have met.  This is the path I've chosen to walk, without regrets. 
Read more

Performance Attribution

 My portfolio comprises stocks and funds from various gurus and teachers. Here is the description of each one. I shan't name them for fear of being accused of promoting one over the other.  Guru 1: 15 years of track record. Averaged 25% per year return. Highly transparent and informed me of every trade.  Result: from 23 Mar 21 to now.  4.8% return.  Guru 2: 10 years of track record with 30% return per year. Gives me a black box type of system based solely on momentum. Scans through the NASDAQ for the top five momentum stocks.  Result: -15.04%.  Guru 3: Internet sensation with almost 1 million followers. Personal friend. Made 3x in 2020 due to investments in speculative tech companies like SEA Ltd, Tesla, ARK Genomic Revolution, Lemonade, Square.  Result: - 13.2% Guru 4: 12 years of track record of around 7.7% return per year. Purely fundamental analysis.  Result: -28.2%.  My own: 5 years of track record of around 18% per year. Value - momentum strategy.  6.8% It appears that my pic
Read more