SD-2020 TRADING WITH THE TIDE

[sd]

Definitely do not want to trade like 1999! I thought stocks could only go up at that time- I made some nice gains back in the day- only to give it all back with Interest and then some in 2000.
I had time to glance at my charts this early pm, saw that I'm down -2% net from my prior high- and prices all turned lower from the open- So I just cleaned house in my ARK funds- Almost a wash for my losing recent adds-.... NAS again leading the indexes lower -2% with the S&P and Dow -1% each.
The recent talk about Tech being overvalued, overstretched, OVER ...... has certainly seemed to have caught the market's ear-
I'm leaving several Buy orders open down near the 50 ema- but in smaller position size.......
Will expand this later.....Down -2% in the IRA account- still holding various other funds, but the growth generators seem to be under selling pressure.
An after hours add- Sell-off was precipitated by a low jobs report- and perhaps the upcoming halt to the present gov't added jobs stimulus to those out of work- Tech broadly selling off- INTC dropping on a weak earnings report, TSLA down -5%, AAPL dropping $18.
With the fears about the Virus still spreading- Jobs not reopening across the states- Lots of schools not opening - Parents struggling to balance having jobs and needing to home school their children>>>> and the spread of rioting in some cities in the Country, The liberal/radical policies of some segments of the Democratic party more vocal, and the negotiation for a resumption of the weekly aid to those unemployed is a bargaining chip to put the Republicans into a bad perspective by playing hardball in passing any proposal- Essentially putting the Republicans at blame if their demands are not met- Should all of this add into weakness in the stockmarket- as we go into August/September - it won't bode well for the markets -fearing a Biden win.....
Still holding VPU, BNDX, BND, VXUS and a smaller position in GLD and PAAS- but should have gone with SLV !

[sd]

7-24-2020-
Friday closed with the markets lower, Gold higher, Silver holding it's recent gap higher level. Glad to have exited the Ark funds yesterday , as they closed down from 1.5-3% lower again today. Premise being they will go lower from here going into next week, and I can consider where my present low Buy limits are - ARKK as one example- I think it could potentially pullback to the 71-72 range- The last area it based prior to the recent move higher. That said, in the back of my mind is the seasonal aspects- traditionally not a bullish time for stocks, the election drawing closer, increasing spread in some States, and many schools delaying restarting - Even TSLA closed lower!
I did see my other allocations- Bonds, VXUS, VPU all also slightly lower on the day, but above their moving averages. GLD position up +.86 to a new high. (small position)
Presently Now 120 in cash positions- = 40% exposure. May add some TLT next week...
wife and I got tested for Covid today- Some positive exposures on the job site in a few people last week- Had to leave work early for the testing- Q tip high up in the nostrils- making my eyes tear and sneezing! Grand baby on the way - Have to make sure we are clear...
Gave us an opportunity to do some shopping this early afternoon...
We Got a couple of new fishing rods this pm, some new lures, and we will play with them in the AM on the Lake!

YES- GOING FISHIN' AND SOCIAL DISTANCING!

[sd]

Fun Day fishing- and also catching! Socially distanced from the crowds, enjoying the outdoors with my Spouse- who is a better fisherman-err-fisherwoman - than I!

i.imgur.com/3NlcOeO.png

[sd]

To get imgur-Sharex to work, I had to disable Microsoft One Drive from start-up-
I'm going to try to upload a few PERFORMANCE charts That would have been appropriate in some of the prior relative performance posts.
i.imgur.com/LpSwjIC.png
This 1st chart is a 2020 Year to Date performance chart of the major broad indexes- as represented by SPY, DIA, QQQ representing the S&P 500, Dow Jones, and the Nasdaq. Additionally, I included the AARK fund. It is easy to note that AARK substantially outperformed all of the others Up +55% from Jan 2 start. The QQQ's are the only major index that managed to be positive YTD - up approx +18%- The SPY hasn't managed to make a gain on the year, and the DOW still in Negative territory.

WHY is this worth noticing?
Well, Momentum is not necessarily something that is always short lived-
The next chart covers the past 600 market days- and it includes small caps- IWM and also the S&P "Value" index IVE -
i.imgur.com/aV5xhyd.png

Worth noticing is the long term underperformance that small caps and "Value" have held for several years- Trends come and go- but i believe that technology- albeit over valued presently, will continue to be the driver that leads the economies of the world forward for the foreseeable future- There will be phases of market pullbacks where value may become in vogue- for a relatively short period I would think, just as commodities , Gold, Silver are finally seeing a resurgence after 4+ years of decline-

Perhaps we shall see a temporary decline- perhaps the election rolls over the government- and a New Order comes into Play- That could potentially usher in a new age of higher taxes on business, on individuals, and a new socialism - all unknown at this point- but targeting investments with an eye towards where the momentum is heading- that would seem to give one an edge in finding those areas of outperformance...

[sd]

Brian Livingston- Author of Muscular Portfolios- posted a study that recommends portfolio rebalancing Monthly vs weekly on his proposed portfolios-

mailchi.mp/brianlivingston.com/027-2#paid2

The concept of his book and the structure of his various portfolios- Papa, Mama, Baby is designed to provide a replicable investment approach with reduced drawdowns.
His approach is based on the concept of Momentum-having persistence, and allocating where the momentum is strongest- His Monthly rebalancing approach also shifts assets during downturns reducing net losses. His portfolios are conservative in their make-up, and perhaps best suited for us retirees for consideration, particularly if we believe that the market's Bull run may have reached a near term top ....I will have to reread the book, and see if my conservative exposures Bonds, vxus, vpu. possibly TLT- are what would be his recommendations.
Note that a big tech exposure is not included - even through a broad index like the qqq's,

muscularportfolios.com/

RAY DALIO- ALL WEATHER PORTFOLIO - www.bridgewater.com/research-and-insights/balanced-beta-investing

[sd]

Nice market move higher today, with me sitting on the sidelines and out of my tech positions- All of the
ARK funds moved back higher Well, I was hoping for a continuation of last week's weakness with limits to repurchase about 5% lower. That doesn't appear to be in the cards. New Phase 3 trials from MRNA and PFE prompted optimism, while the lack of a resolution to the end of the $600/WEEK SUBSIDY doesn't hold much promise with the Republicans trying to prompt people to return to work and what jobs may be available and get off the public dole. The Republican offering is not yet on the table, but will be designed to get people off their respective Arses, Mask up, and go back into the work force- We need to try to get a semblance of our way of life back, with necessary precautions taken - masks, distancing etc
This virus appears to be substantially more contagious than the flu- The Death toll annually from the Flu ranges 25,000 - 40,000. We have easily surpassed this number with Covid
and do not seem to have seen a summer reduction ..... Many schools are delaying restarting, Teacher's unions active, virtual learning may be the norm for this fall for many-
Elections in the balance and the Republicans struggling...
Covid has had a huge impact on our country, and some of this impact has been jump starting technological adapting - Zoom, teleconference-teaching etc- Just consider the future need for automation in the manufacturing industry- eliminating the frail human component to prevent disruption.
Since today's upward action does not support my pullback thesis- I have a choice to make- Chase or continue to set aside awaiting a decline.....

[sd]

7-28 Welcome Hazel Laurence to this World!
Tech sector declined today deeper than the other indexes. Perhaps notable is it has now made 4 closes below the 10 ema- where the typical weakness was limited to 3 days- typical of the prior pullback lows since mid march. Perhaps I'm reading too much in what looks like sector weakness , hopimg for that lower reentry....Perhaps this market's political unknowns- the extra paycheck stimulus ending- may be the tipping point for the momentum continuing higher.
GOLD has been climbing with gaps- so I just raised my stop on my GLD position to $181- will net +8% if it executes here from my recent entry-

[ira85]

Wow that's a big bass!!! And it appears congratulations are in order for Grandpa SD. Hip, hip, hurrah!

And of course, I was premature in stating I thought the worst of my computer problems were over. Nothing bad happened, but it now appears there is much, much more work ahead than I realized. There is a toxic synergy at work when I try to fix something on the computer or in an iphone. I am terribly slow and I have very limited knowledge or skills with fixing Windows and iOS problems. It seems everything I do results in needing a password reset. It's amazing that there are people who like to fix these things. Back tomorrow to changing Apple IDs and doing a synch, whatever that is.

Oh, major takeaway. . . beware there are some very smart phishing scams out there. Some involve real live computer technicians who work at damaging your computer instead of fixing it. I dodged a bullet when I ran into one of those. They started with a very authentic looking web page offering technical support to Roku customers. I thought they were Roku employees. They weren't. Beware of wolves in computer tech support clothing.
ira

[sd]

Grandfather 4x now- all girls- Hope to teach them to outfish me like the wife does LOL! Covid negative- Life goes on and is good.
I similarly have computer issues- thanks for the warnings about the on-line scams- I'm usually enough of a skeptic- and like to waste the time of the SS callers trying to scam on Social security- I simply wished i had done a back-up to a separate hard drive/storage as i seem to have lost years of family photos/videos when I did an update to the latest MSFT nversion and the Cloud- at the same time my Company did some kind of upgrade and I was using my personal computer because the company computer had quit a few weeks earlier-
Still doing a waiting action with lower limit buys- GLD position with a tight trailing stop higher- VXUS higher- vpu basing- and watching tech-
Todays higher market action ....still in a narrow tight sideways range- so i don't feel FOMO.....

[sd]

7-30 Big loss on the jobs front -32% should have set a bearish tone today, but Big Tech - AAPL, FB, AMZN, up large after reporting big earnings beats- Unfortunately, I'm positioned with no tech exposure- just lower limit orders for ARK funds. I didn't like the various charts I viewed earlier today, but the beat by the mainstream tech should likely see a resurgence in buying interest. The ARKF fund was up early today- challenging the recent highs.

[sd]

Did Buy some ARKF Friday on the breakout,
Response to a question on whether one should get out now and lock in gains -

Typical IRA investment advice suggests that people don't put all of their eggs into one basket only- That they be diversified in different asset classes and include Foreign and emerging market exposures- As we have rapidly developed into a global economy, Often what affects one country is mirrored in others- If we look at the broad indexes- USA, Europe, Emerging markets, China - over the past 5 years-
the US SPY is the Green line- clearly the outperformer of the group-@ +75%- Click on the imgur chart to enlarge .
i.imgur.com/KUv8GKp.png
What should also be noticed is the large % declines that periodically occur - and in March the 90% gain lost 2/3 of 5 years of growth within 1 month- dropped down to a +30% gain. If one simply sits through these drops, one hopes that the market will recover soon. And this has been an extraordinary recovery- but we should be aware that it's entirely possible to see another large decline.
Here is a 5 year chart Europe, Emerging mkts, China holding around the 20% gain - Adding into it the Nasdaq Tech sector -QQQ, as well as the speculative ARKK fund . SPY return about 75%
The qqq's have delivered over 2x the performance of the SPY- with a 170% return , yet the ARKK fund delivered 4x the return of the SPY +320% over the same period. Note that what goes up a lot can also decline a lot- and so the larger gain can also come with a potential for a larger Risk- Also, a significant portion of the gain in the SPY is due to it's holding a portion of it's assets from the Tech sector.

One of the things I found out during the March sell-off is that even so-called "Safe" or low volatility funds are not necessarily protected-
i.imgur.com/Td0FiJW.png
I had bought some SPLV as the markets were selling off- The S&P Low Volatility Fund- is supposed to be less volatile than the SPY
It actually declined just as much as the SPY, and made a shallower recovery- compared to the SPY.
The IVE represents those companies in the "Value" index of the S&P- You would think that others would be seeking to hide out in "Value" during a market sell-off- What a misnomer that is- The IVE lost the greatest - down -37% ; more than the other indexes- and is still in negative -14% YTD.
The QQQ's - Tech sector ended up declining -20% from the start of the year- and made the greatest recovery -now up +25% from it's Jan 2020 start.
Adding the AARK fund into the chart- Notice the light blue line- Up almost +20% prior to the March sell-off, dropped to the -30% level, and then recovered back to give a +55% return- double that of the broad Tech index QQQ. However, In a sell-off market investors look to lock in their gains where they have them- so outperformers often get sold off quickly in a turbulent market.
i.imgur.com/bBO9c8m.png

It's worth your while to understand- and compare- what you are invested in- Particularly in an IRA account - reviewing how your assets are positioned, and periodic rebalancing of the account- Obviously, as one gets closer to retiring, one should seek to preserve more of their capitol.
, but one will still need to be invested -even through retirement. What is dangerous is to be too conservative with investments-as long as one has enough time to recover from market volatility- As can be noticed from the charts- as certain sectors are favored by the markets- the momentum in those areas can bring larger returns- but also with greater volatility. If your IRA offerings are limited to just a family of mutual funds without giving you the flexibility to have alternate selections, you could consider rolling over some of the present IRA into a Vanguard or Fidelity IRA brokerage account . I rolled over the majority of my IRA account from my company's sponsor- because I was limited there to just a group of American Funds. I rolled over into a Vanguard IRA brokerage account- and it gives me the flexibility to purchase stocks ,mutual funds, or ETFs from any provider- I primarily use ETFs because of their relative low costs and it gives me the opportunity to get broadly diversified if I want- VTI, VXUS, or to get very focused with ARKK,ARKF,ARKG,ARKQ with some of my investment dollars.

Right now it certainly seems that we have all the ingredients in place for a market sell-off- The markets are clearly extended - with Tech at high valuations- If the markets should correct- looking back at the 2008-09 decline - financial bubble - notice that the Tech sector recovered by 2011, and has led the way higher ever since. It took the S&P 500 longer to get back to the 2007 highs -
I think the Tech sector is where change and growth occurs- Tech had a big bubble pop in 2000- but the tech of this era is indeed in everyone's hands these days, and -along with advances in medicine- and- with the major impact this virus has had in limiting our contact, flying in a confined tube through the air, floating on the seas with thousands of other passenger on cruises- where the Neuro Virus used to take it's toll..
Last chart- Going back to 2007-
i.imgur.com/Izac9Z4.png
The markets started to decline in October 2007- GOLD - GLD outperformed for a few years, but then declined- and is a poor investment vehicle- doesn't deliver any dividends when owning it.
Bond fund- BND -green line- relatively safe- minor declines- but very low growth-
SPY-Red line- recovered finally in 2012 from 2007 highs-
Tech- QQQ declined less and made the recovery sooner, and went on to outperform.
What is somewhat troubling at this point in viewing Gold- red line- is -after a decade of lackluster performance , it is outperforming in 2020.
The US has just been downgraded as a creditor/ Risk, Dollar is in trouble, and I think the music in the background I hear comes from
www.youtube.com/watch?v=buX3i3EJIXU When the music stops- ....

i.imgur.com/CRUFQyz.png - Chart with GLD in 2020 I recently did buy a small position


Since I'm a TA (technical Analysis) junkie, I view things through the chart primarily- Price action combined with some moving averages
to give a graphic representation of what the price is doing- I'm a Trend follower- and want to go Long When price is moving in the right direction- Here's a chart of a GLD trade I'm in now- Did not get in it early on- but once it moved out of the sideways base, made a "breakout higher-" and another step higher- I entered - just prior to the upwards momentum rise - Green dotted line is the fAST 5 DAY MOVING AVERAGE lINE- Because sharp momentum up moves may pullback, I've raised my stop loss to the 10 day Moving average line to lock in a gain if it weakens. Short term swing trade -Will try to follow it higher with adjusting the stop higher should it continue to go up.
i.imgur.com/RMQQa4J.png
I took a small long position in ARKF Friday based on it "Breaking out" and making a move above the recent sideways range-
i.imgur.com/zgG2th4.png

In general, the stock market has pullbacks several times-or more- in the course of a year- generally moderate -5 to -10%, and occasionally
deeper. Those small pullbacks are shallow and the recovery is usually quick as well- The issue in paying too close attention is that every decline may appear to be the start of something bigger- or that becomes the Fear- This year's decline was unusually hard and fast - as was the recovery-Having stop-losses in place took me out of my positions early and the depth of the decline allowed me to get back in at significantly discounted prices- However, I also took profits on the way back higher- and did not hold for the full run up - but I'm up decently for the year 2020 so far.
Other than becoming addicted to the stock market- the best advice is to learn about structuring a portfolio based on what Risk you are comfortable with taking, learn about portfolio rebalancing- done every 3 months or so- , and during down turns, it's a great time to be adding to your investments if you have money set aside in a money market fund- Or, have a limit order waiting at -20% below today's value for a fund you may want to add into-

[sd]

8-3-20 Markets rallied higher- I added additional positions in the various ARK funds-Despite the negative news surrounding jobs, end of stimulus PPE to citizens unemployed-
Stalemate in the talks between Republicans and Democrats? Last week ended the gov't program of $600.00/week-

[sd]

Doubled my Ark positions today- ARKW,ARKK,ARKF,ARKQ,ARKG- Added to GLD, Had bought NIO-small position- saw it decline today but still above the recent base-so I think it has promise yet-despite Cramer's negative comments about the EV industry. I had a limit order for SRNE this am- but it opened higher and closed up +20% ....A friend wrote with the list of picks from the prior horse race bets- all up nicely with large gains- FSLY trending to a new high- Never a position-
Why add more Risk? Well, small positions Risk less and certainly gain less- It appears that despite the fear of Covid spread, the Fed's support of the markets looks to keep the markets up here- I'm 2% away from my prior high- and only by being in growth funds can I close that gap, yet I'm trying to do that with a 15% exposure .
I think I'm a good example of why market timers tend to underperform- not wanting to bet the Farm and find that the markets toss me into the ditch with a big set back and few years to recover.

[sd]

With Tech under pressure this week, I split my stops in the ARK positions- I positioned one stop under yesterday's low and the 2nd stop slightly above the point of entry- Took
a loss on the ARKQ, and had the other positions execute on the higher stops for small net gains- GLD position did not stop out , but the SLV position dropped into negative territory. Again, I will be looking to invest those $$$ at a lower price. It's interesting that Tech is not leading this week, that Gold and Silver had climbed higher earlier in the week, and the Politicians cannot come to an agreement to support all of those without jobs and whose unemployment benefits stopped this past week- Talk about a potential for personal financial tragedy for those Millions that don't have jobs to go back to through no fault of their own-
The Covid virus continues to be front in the news, and talks about it's resurgence in many States and affecting those schools, sports teams etc makes it appear that it will be difficult to
reopen as normal this late Summer. What are the chances that not one case will not arise, school- sports team- then closing that down for the required isolation period- of 14 days- and then another incident- and another 14 days- Hearing that here in NC as some companies try to reopen locally, only to find an infection identified in the 1st week- and numerous other people testing positive after exposure- .


Is this Our new Normal?

[ira85]

As you will see, I got carried away while writing the entry below. It's a tad long and rambles from one topic to another. All stuff I'm interested in, but probably not many others are so interested. I'll try to be more focused next time.

Something I've noticed in the 35 years I've been following the stock market. Luck often gets mislabeled as genius. Again and again some investor goes on a winning streak and gets labelled a genius. Then the genius goes through a cold stretch. What happened to the genius?

I think 2 things happen in such cases. During the genius winning streak the market is going through a period in which conditions are just about perfect for the "genius" investor. After being in sync for a long stretch of big gains, the market moves in a different direction and boom, the genius's winning strategy no longer works. Example, Ken Heebner repeatedly made big bets on contrarian investments, e.g. he shorted tech stocks in 2000 after they had a long stretch of out performance. He made lot of money and notoriety for his gutsy, contrarian call. Then he went long home builders in 2001 and it was a big winner too. In 2006 Fortune magazine called Heebner the "mad genius of mutual funds" when he was ranked America's number one fund manager. But he's been wrong again and again since then. He lost 48% in 2008 and 26% in 2011 with market trailing results in the in 2009 and 2010. From 2010 to 2019 his average loss was 11.8% per year!

Another example, Bill Miller famously beat the S&P 500 for 15 straight years ending in 2005. Then he under-performed the S&P in 5 of the next 6 years. Then there's Bruce Berkowitz, named U.S. stock fund manager of the decade in 2010, had a 32% loss in 2011. Sometimes an investor picks the nearly perfect sector at the perfect time, long precious metals, short small value, long biotech, or big growth . . . The investor happens to be in the right security at the right time. More luck than genius.

In addition to the market changing direction, sometimes genius labels come and go due to simple math. When a performance is well outside the normal range it tends to be followed by "regression to the mean." The rule is, in any series with complex phenomena that are dependent on many variables, where chance is involved, extreme outcomes tend to be followed by more moderate outcomes. If an investor has a series of big wins his future returns are probably not going to be as good.

Who's on a winning streak and looks like a genius currently? Might it be Catherine Wood, head of ARK Funds? "Investing in the future, today. ARK defines disruptive innovation as the introduction of a technologically enabled new product or service that has the potential to change an industry landscape by creating simplicity and accessibility while driving down costs. ARK ETFs aim to provide access to companies benefiting from disruptive innovation." Sounds good. (To me it sounds like Steve Jobs).
"What makes ARK different?
* Focuses solely on disruptive innovation
* Seeks to capture leaders, enablers, and beneficiaries of disruptive technologies
* Utilizes an Open Research Ecosystem that combines top-down and bottom-up research, designed to identify innovation early and convergence across markets
* Offers innovation ETFs that span market capitalizations and sectors, aiming for low overlap to broad-market indices."
Is this description consistent with genius? Is Catherine Wood on track to develop new technologies that will change industries and how we live? Is the Tesla electric car going to accomplish the goals above? Maybe. It seems to have the potential to do these things. When Henry Ford started his car company he built a different kind of car in a different way. The assembly line allowed him to build a car quicker and cheaper than any other car. Henry Ford changed our way of life for millions of people. That may be why we have Ford cars now and we don't have Studebaker, Hudson, La Salle, et. al.
Time will tell if the Tesla becomes a game changer like the Model T.

What product developed within the past 40 years meets these criteria for disruptive technological innovation? The smartphone. Who made the first smartphone? Was it Nokia, Ericcson, Motorola, Sony, Blackberry? The first true smartphone made it's debut in 1992. It was called the Simon Personal Communicator, and it was created by IBM more than 15 years before Apple released the iPhone. The iPhone was released June 29, 2007 years after at least a dozen other companies produced smartphones that failed in the market place.

Back to the discussion of genius, Tesla, and Catherine Wood.
Steve Jobs said “Every once in a while, a revolutionary product comes along that changes everything.” Apple aimed to make the iPhone “way smarter than any mobile device has ever been and stupid easy to use.” The iPhone seems to be the kind of disruptive innovation Catherine Wood is talking about. Steve Jobs might be an example of genius, but he reportedly didn't understand the transformative power of the iPhone at first. He thought the iPhone would replace the iPod. Instead of carrying a phone and an iPod, Jobs thought they had developed a way to carry and use only one device, a phone/iPod. So maybe the genius of the smartphone was some unnamed person in engineering who pointed out using a phone to access the internet was a really big deal.

Are the ARK Funds and Tesla electric car a big deal on the level of the smartphone? Is Catherine Wood on the level of Steve Jobs? Time will tell if the Tesla is a game changer. But replacing the gasoline burning internal combustion engine with a quiet running, potentially solar powered motor that needs much less maintenance, that would be a very big deal.

And time will tell if Catherine Wood is doing something truly transformative at ARK Funds on the level of Steve Jobs and his leadership at Apple. Maybe she is. But maybe she's a highly motivated sales person pounding the table about the wondrous things these small tech companies are going to do using momentum investing and enthusiastic marketing to get investors to pay nose bleed prices for stock in these companies. Maybe Tesla will turn out to be like Apple, but it could end up being Blackberry instead. Maybe Catherine Wood will end up being Steve Jobs, but maybe she'll be like many other highly motivated, enthusiastic, commissioned sales people who claim to have a better mouse trap, but it turns out to be just the latest in a long line of such mouse traps.