SD- 2021- ACTIVE MANAGEMENT FOR GREATER SUCCESS IN 2021

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9-23-2021 Futures stay in the Green!
Evergrande saga continues to unwind in China- So far a non-event in the US markets- Reportedly not considered to be a global systemic event...Underscores why China is not to be considered investable-and the assets of it's big tech companies- not directly investable- BABA, BIDU,JD,DIDI - these and many such stocks are trading based on unsecured promissory notes listed in the Cayman Islands- Unfortunately the SEC is allowing Chinese stocks 3 years to come into compliance with accountings standards that meet the US companies reporting ..Why should that be allowed in the 1st place? If it trades on one of our exchanges- it should meet the same rules and guidelines as other US companies.

The FED clearly reassured the markets that investing in stocks will continue to be the winning strategy to employ-in the months ahead! With an accomodative FED- it signaled it will begin a gradual taper-but coming earlier-2022- perhaps due to inflation? Employment goals are close to being met? HMMM -
The Taper announcement - reduction in bond buying- is likely to be announced in December- The Fed's balance sheet will be inflated to $9 Trillion Dollars by June of 2023!
So is it all RISK-ON across all sectors? I'm obviously very reluctant to think it's an all-clear signal- Again, this is my negative Bias at work-resulting a very high net cash % that I have to decide how much to put back in...and where...
Raise tne Debt limit ? it always gets done.... GDP growth projections lowered.
As I look for guidance- outside of my own reactive interpretations - the technical assessment of David Keller gives a professional overview -available daily on stockcharts tv-and Youtube-
David Keller's take- The Final Bar:https://www.youtube.com/watch?v=rrLEkoyDMuA
Note that we have dropped below the 50 day ema this week- making a 1st lower low over the past year- Discusses at 8 minutes in.
Breadth indicators are all declining -
Cathy Wood- Ark funds- Supply chain, Employment-Deflation -not inflation coming- an unusual perspective- Will she be correct?
Her longer term overview from 2 weeks ago:
www.youtube.com/watch?v=KzmZd1RiO6g


Notice the green across the boards from yesterdays performance chart from Finviz.com- Group----Energy the clear gainer!



Cramer intervieved CEO of Unity software yesterday and proclaimed it to be outstanding-
i bought a 1/2 position on today's breakout , and a limit order to fill the other 1/2 @ 135.--if it pulls back and tests the breakout.
Ticker U

in the IB all cash account- 1/2 positions in the Ark funds as trades, also FTNT,UNG

With the Powell policy supporting the markets- The dreaded sell-off was short lived and Mild-


I am making a decidedly different change in my market approach-
Van IRA I bought a basket of diversified ETFS and a few stocks- Keeping some cash available- will try to hold most of these funds and add to the position on any initial pullback. I'll put on my Big Boy boots and see if I have the temerity to withstand some volatility-
In the Roth, I am including some more spec names and individual stocks for trades.

RED across all positions- including energy and commodities-
One exception is TAIL- up today as it is supposed to do.

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9-24-21 Futures in the RED!
China crackdown continues- Today expanding to calling Crypto illegal.
With my decision to put a majority of my cash back into the markets yesterday, I'll be getting an emotional test today with the majority of my positions expected to see declines today- Most of the purchases were still beneath the levels held prior to this week, but were not bought on the big dip on Monday. I felt that Powell gave the markets every reassurrence concerning the slow and steady pace of any taper and future rate hike-However he also implied that if inflation runs too high, a rate hike may come sooner than anticipated. The 10 yr rate is today up to 1.42% - Higher rates are negatives for high valuation tech positions- or so it's been portrayed as a negative- A lot of investment pros watch the correlation with the rates and the market's movements.
I'm holding a small % in cash cash - with the intention to put to use to average down costs-or to add to a new position.
From a technical point of view- The market's lower low printed this week should be a line in the sand as we move forward this month- If that lower low fails to hold for the Spy-It would perhaps indicate that the markets are going to take that steeper and faster decline- and potentially go lower- Similar to 2018, the markets declined almost -20% from summer into Dec 24.
My allocation decisions in the Vanguard IRA were my attempt to construct a somewhat diversified portfolio- Not to try to "beat the market" per se- but potentially be able to have holdings that benefit and mitigate a market decline-
The construction does not include any fixed income- I have a fixed annuity held in a different account through an adviser that takes the place of the fixed income - Annuity Value is approx 25% of the total account.
Every September period has not been a decline- but the September-October period historically averages out to be a period of seasonally low returns- and indeed some larger declines. After this week settles out, I'll decide on what portion of this account will have stops -or not-
On Monday I have an interview with an Edelman financial Engines adviser to review the entire account-including the portion held under an other adviser- I'm looking forward to the impartial review-
As fellow market Time Ira had noted in his posts here -particularly earlier this year, He acknowledged that his reluctance to sustain a loss
A note for those that read this thread- The account values are relatively small -compared to those that were prudent enough to start to invest sooner, invest more, and made better financial decisions earlier in their life- and also that stayed the course investing steadily in the markets -despite the volatility- That would apply to holding a diversified portfolio though- Losses from Tech in 2000 took over a decade to get back to breakeven- a lesson I experienced personally-
While I am compelled to be an active trader- largely due to that experience and 2007-09 major -50% decline, the markets
continue to be the place to realize compounding over time- As Einstein reportedly said- Compounding is the 8th wonder of the world- It particularly takes off exponentially over a longer period- decades- not in a few years. So, I would also recommend
to others- Invest consistently, -timing is difficult- and will bring lesser gains in a steady market-
In the back of my mind is the nagging thought that NOW is not the time to relinquish the timing stoploss approach- How will I respond to a drop below the recent swing lows? And what if the market actually has the much anticipated -10% long over due correction in the next months? Would that not prove to be the better time to go back in?
Such is the mindset I cannot escape-

The stop-loss approach has guaranteed a level of relative safety-allowing me to take more aggressive positions when I should be in bonds and dividend exposure at my age.

David Keller's take on price action through 9-23- Worth noting- IF the markets break the recent low-Price-Breadth-Sentiment- His criteria to interpret the market price action.
www.youtube.com/watch?v=qNI8nvSq2Z8


it will be Risk-Off and i will likely reduce my position size- in those areas breaking down.

Knowing the Relative Strength performance-compared to the "market" SPY . Joe Rabil stockcharts provides his application of RS
He demonstrates using both the longer term charts in his interpretation. -Monthly - Weekly-Daily

www.youtube.com/watch?v=8d6B238_3dc

Rabil's approach looks to be for the longer term trades- willing to hold through the daily volatility for the longer gain.
In this video , he also demonstrates how he drills down finally into a daily chart and uses the daily chart to apply a tighter stop-loss -on buying the breakout. there are a lot of missed gains -and give back -it seems when one waits to enter only after a weekly signal, but one also stays potentially much longer in the trade

www.youtube.com/watch?v=X91y13pCUkc

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9-24-21 End Of Week- I'm down from the prior week, but up a bit from the Lows on Monday's sell-off.
Stops had been executing during the prior week, account struggling- and it generated a lot of net cash-Stayed above the 240k level, but it got Close to dropping lower- However, as i was left with just a handful of positions coming into this week, Monday was not a big crash in terms of the account drawdown- but I expect a lot of persons took it on the chin-
This is the benefit of applying a tight stop-loss approach- but overall, it has resulted in underperformance over the course of this year since the Feb highs in Tech.
The market rotations after Feb proved to be difficult to try to find a trend that had legs-- The markets pushed up sector and industry groups - to extremes,and then dumped them- but some stocks still continued to make month long uptrends-
Value had a short term day in the sun- small caps shining for a short time- and then value fell to the wayside- and small cap growth took over- Meanwhile- Large caps eventually kept the leadership role. The shifting of investment dollars through different sectors and industry groups seemed to be pronounced this year- Perhaps it's just my greater awareness .

As we End this week, and as i made a shift- at what is likely the very worst time- to initiate a change in my approach-As the markets made a break below the 50 ema- it looks like the 1st test of the market getting ready to roll over in a seasonally volatile and often weak time of year. However, the lows made this week represent a point from which to judge whether the trend is rolling over into a downtrend.
Closing account value -IRA- 174,812 Roth $66,955 Cash 20 -30% in both accounts

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Friday closed weakly ,but improved from the deeper negative futures premarket- Notice that Energy has been the better gainer recently,besting the other sectors on both the 1 week and 1 month basis.

In the energy sector, I am holding the index -XLE, trading UNG- just reentered this week on the upturn- DVN
Commodities -including Ag - Not chasing Gold or silver -

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9-27-21 Nas & S&P Futures in the Red- Energy up Premarket-
Mohammed ElErian- supply disruptions will continue; similar to what is occurring in Europe- Inflation will be more persistant than the Fed is recognizing.
Meeting with an Edelman rep later today....Changed- Tuesday.
Energy leading the charge- I added to the XLE and DBE positions this am.
The Higher yield in the 10 yr- 1.44% reportedly the reason tech/Nasdaq is down -1%
I'll adjust some stops today- using last week's lows as the point where i'll consider selling and lightening up- Financials up today- on the higher rates.

Added to energy positions- moving sharply higher today- also added to SYLDto overweight.

Following the momentum- Disappointed in TEAM - had a very substantial gain that got sharply reduced today as price dropped $20.00-
While still a net profitable trade, Team has failed to make any headway- selling the position at the $390.47 dbl price bottom.

Tech seems particularly reluctant to perform in a rising rates environment- MSFT position is also not able to make any headway .
Broker Dealer position -IAI turning higher today as financials gain. Transports IYT gaining ,

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9-28-21 Premarket Futures down on all indexes- Nasdaq futures down sharply-233 pts.
Energy is gapping up again today, withNat gas up +7% -overnight.

Afternoon- markets sell-off with Tech down -2% - 10 yr Bond yields move above 1.52% negatively affecting the tech sector the most-Lesson to be reinforced here- With trends rolling over, stops ,stops,stops.
Dan Niles has been sour on tech for a while- and switched from AAPL long to AAPL short-
He runs a long-short hedge fund ; Satori ; and posts articles- recently explaining his overview of why the markets will correct: www.danniles.com/articles

Note that Energy is the only sector in the green- and even financials are seen in the red.

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9-25 EOD- Some damage done today as many positions sold off hard- Plus, I elected to sell off those positions and lock in the losses in everything Tech. I've kept the positions active that deal with energy, commodity ETFs, and industrials,transports, and real estate- although it's been in a decline ....Even with the expectation and knowledge that September's seasonality was often negative, I got pulled back in with the market's rally from the sell-off the prior week-
And that was a mistake- although I labeled it as a bull-trap- I didn't have the conviction to stand aside- and so took a bigger net loss than was necessary- My offsetting positions that worked and gained yesterday and today, didn't make up for the losing momentum. The energy positions popped higher at today's open, but closed lower on the day. So, the market rotation ended up with Energy flat -And Tech taking it hard.

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-9-29-21 Markets all in the green after yesterdays hard sell-off- I tightened stops on the energy positions to lock in gains-UNG for example gapping down. I'm going to approach this market with the belief that we can see some upside moves, but view them as bull-traps and short term trades....
SMB capital - Commercial propfirm - Good videos on YouTube Mike Bellafiore PDF book-One Good Trade-
Why this is primarily a story initially about day trading- it's also much more about doing the work- the prep, cutting the losses and following a disciplined set of rules-


daytradergt.com/wp-content/uploads/book/One_good_trade.pdf

Viewing what held up and worked in the sell-off - Holding a nice gain in GE- and impressed by how well it held up in the sell-off yesterday- along with the Energy names -I'm overweighting GE- Doubling down on the position with a tight stop-loss . My net Cost basis to breakeven is $104.33 The "breakout" this week was at the $104.00 level. I'll set my stop-loss just below that level $103.90- Risking $43.00 /$10,674.00
I'm viewing this as a trade- Not an investment- I'm upping the position size- and compensating with a very narrow stop-loss- Is the stop loss too tight? a minor drop will cause it to be hit. However, the market's volatility is causing me to try to adapt -
i netted a nice $500 gain in the XLE position -It was overweight- 200 shares- sold it on a tight stop, and put a partial position back on today. I'm going to bracket the buy-stop and lower limit orders for the trade- I feel that the energy trade has room to run- and will be willing to hold if it takes a dip lower- The net prior range is $50-$46....

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Appreciate the larger cash position- but still struggling with the remaining- and holding some of these positions -
Markets all turned Red going into the Close- Energy positions saw some decay today, but i expect they will gain in future
I took a fairly sizable position in GE with a very tight stop-loss that executed on the price falling back today.
Retail sector under pressures- inflation, delivery shortages,
Gov't reportedly agrees to extend the debt ceiling-
Several Democrats got the backbone to argue agianst the attempt by the far left to tie the 3.5 social improvement package to the 1.5 Trillion actual hard infrastructure package. Booyah to Joe Mancion (sp?) for expressing his opposition to the largess in spending and expansive social do good programs.
Face Book underfire for research into targeting a program for tweens- and also the negative impact the addiction by young impressionable people have in the context of social media dominating their lives- All Tech under selling pressure in response to the rise in the 10 year rates-
Asset shifts into value, financials, energy. Practicing a buy and hold for the time being against my instincts to bail- but that has also been the road to mediocre performance when the uptrends were holding-

September has turned out to be along historical negative norms-
Be very aware that the Biden proposal to record any banking transaction over $600.00 is so Big Brother invasive, all people should let their congressman know to oppose this- absolute invasion into their personal finances .
The $10,000 present level recorded by banks and reported to the government should be completely adequate to identify drug and money laundering schemes. My decision to spend or receive $601.00 is None of the governments business-!




Road Trip tomorrow to the mountains of NC to do Apple Picking with family!

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10-4-21 Futures down- Heading out to the Lake to start some fall fishing.

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10-5-21 - Futures up today- Got home yesterday before the market Close- Lots of Red in the Tech sector-and i made some sells on the reduced positions that were still declining- and I looked at the MSFT chart and added back shares as a trade. The accounts closed up higher yesterday thanks to the Energy and Commodity positions.
Today, it looks as though we'll start off with a reaction move higher-
Mid afternoon - green across most sectors nice follow thru gain today- Adding to the Financials XLF
Added to the energy/Gas,COMMODITIES- FCG. ,comt,nsp<pxe AND- Live Nation LYV, TA,
All in-in the IB account- Approx 50% cash in the combined Van Roth-IRA
Yesterday's MSFT entry proved timely with today's bounce higher-

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10-6-21 Futures Waay Down-! The correction appears to continue- Yesterday's bullish market moves in Tech and growth stocks will likely be negated- Nas down -200 Dow-340 - Spy-51 Several hours before the open- so there's the potential for a lessening...10 year 1.547%- Still relying on the commodity/energy positions to continue to provide support in the accounts-
Also holding a position in Financials XLF- Premise is higher and rising rates support the financials- Also holding a position in small cap value VIOV....
The question is will we breach this week's lows and start a new lower leg down further?
The trend line projection of a guest on the Final Bar certainly shows how extended price is despite this period of minor softness. Potentially much greater downside, volatility increasing, 2/3 of the S&P are below their 50 day ema according to Keller.
With the present chop- sitting on my hands would indeed be the prudent choice-lightening up on declining positions, and taking some losses if the expectation (fear) is that we have a more significant move lower.
My energy positions are showing red premarket- so we'll have to see how they develop- My bias is that energy will continue it's leadership- but i've got some significant offsetting gains in some of the positions- DVN, RRC, FCG
However- one lesson to be learned - and reinforced- is that the Trend needs to be respected-
While not allowed to take short positions in the IRA, Roth accounts, I am holding TAIL, and considering a position in HDGE- a bear fund - a buy-stop higher than the present range is a potential consideration if markets really develop momentum lower.


David Keller-The Final Bar - Perspective without any HYPE:

www.youtube.com/watch?v=dzIIFfXZZQ4&list=PLyNJu-3PikrS8Qs5_LwIK4LOpkDp8z-uO


I'm getting hammered in 2 portfolio positions I elected to hold without stops-
HEDJ- Europe is getting slammed due to the extreme costs of energy there ,
And the XLRE- I felt that the XLRE shouuld be a Core dividend paying position- but the trend has continued lower in both .
Tomorrow we have an interview with Edelman Financial Engines- to consider allowing them to take over the Vanguard IRA -
While I periodically have short term periods of out performance when the markets are trending well- and reduce lossess with stops- over the longer term my application of this approach has underperformed-
I am also considering the Risk-Reward performance I have had with another adviser over the past 5 years- with relatively safe and mediocre returns - 6% avg annual but that also has come with limited and reduced downside.

Russia sells a lot of Energy into Europe- RSX broke out higher yesterday and I may add this as a position today-
i'LL START WITH A LIMIT ORDER TO SEE IF PRICE WILL PULLBACK TOWARDS THE BREAKOUT LEVEL and Close the Gap.
I'm on hold on the HDGE as a position, as i want to see how the markets settle out direction wise after the 10 am- Allow that 1st 30 minutes to shake out- and see what evolves-



Limit Order lowered




Futures moderating into the open

10 am - Indexes down -1%
Sold FCG as nat gas futures lowered -
RSX is pulling back into the gap- low $30.89- dropping my limit order to $30.70. rUSSIA SAYS IT WILL BOOST IT'S NAT GAS SUPPLY TO EUROPE.

YESTERDAY"S BULLISH PERFORMANCE


TODAY'S BEAR - Energy giving back some recent gains- I expect that energy/commodities will continue to maintain the outperformance based on the longer term momentum seen in the performance charts-

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10-7-21 Markets in rally mode- Green is the color and Risk is being put back on!


I used today's bullish price action to raise tighter stops - back into net profitable territory over the short term- with 2 positions still in the Red- XLRE, HEDJ -both moving higher but had contributed to the Red in the Portfolio- I sold the Tail position for a $150 loss on 400 shares- as the market's turn higher moved the position below it's recent range low-

I'm still heavy into commodities and energy-light on tech except for a MSFT position - stepped in and bought it on the cheap this week. Same with the ARKF, ARKQ- both were bought in oversold territory this week , and now are back in the Green
Bought F at the Close $14.90 on the break higher of the past week's range. trade- not an investment .
I sold DVN on a raised stop and looked for a reentry as it's lower, but not seeing signs of buying - It was extended away from the fast ema and has pulled back . Potentially it may pullback a bit more- but the energy/oil play likely has legs going into the fall and possibly the winter- Energy has been downtrending for the better part of a decade, and this move is not to be considered as a long term new uptrend developing- Possibly for months- but ultimately the oil industry is under the ESG crosshairs and also viewed as a negative industry by the biden admin.


In a major move, I met and interviewed an Edelman Financial Engines rep today and discussed having them manage portions of both the IRA and portions of our Roth accounts- It's a move I believe I'm going to make-
From the personal side- I recognize that my Fear of sustaining a large loss ultimately contributes over the long term to underperformance in the markets-
Edelman is the largest Fiduciary Adviser in the Country, offering portfolio management utilizing relatively low cost ETFs or some DFA institutional funds in one of the portfolios we reviewed.

For those nearing retirement- or even those wanting to explore some Roth or IRA approaches outside of the confinement and limited allocations available through many employer sponsored plans, Edelman offers a free consultation - and -as a client-
covers the spectrum with access to attorney's advice for wills, trusts etc. Fee for us will be 1.7% and will be using relatively low cost ETFs in the portfolio- Which gets rebalanced at any time a holding exceeds the 5% variation- Also, Edelman's in house analysts review the markets for major trends and potentially make portfolio changes- but with a view to maintain a long term approach.
An objective review :https://www.magnifymoney.com/blog/investing/edelman-financial-engines-review-ria/
The Edelman Home webpage:
www.edelmanfinancialengines.com/

This is a major Shift in responsibility on my part- And- Frankly -something of a relief to delegate the responsibility of the retirement portfolio over to a professional manager- This is something that IRA also did this year- and I think that is a prudent decision for both of us- As individual investors, we are prone to react on our own bias's ; That may be a Fear based on the news and all the investing noise we receive over the Tv or Web- Or, conversely, we allow ourselves to hold a "belief" about a stock- or industry group- and allow ourselves to make an investment despite the market's consensus telling us that the market does not hold the same opinion.

While this thread has evolved into a solo blog of sorts, the intent has been to record & share part of the journey- ideally something others may gain some useable info from on occaision- The subject of acquiring retirement funds is so critical-
Start early in Life- develop the discipline to not incur debt, don't rely on credit cards to satisfy one's desires to have "Things" - and invest for the long term - Lessons we belatedly learned later in life- But it wasn't too late-- But Wakeup-
If you're reading this and age 40+ Take a good assessment of your personal situation -
If you have personal Debt- Try a Dave Ramsey wake-up- It's amazing how quickly the past decades have gone by....

Next week I have an interview with a local
Adviser that has managed a portion of my funds- including an Annuity and an asset allocation IRA. It's been 5 years with them, and I'm frankly disappointed in the overall net returns-That adviser acts as a middleman for EQIS funds - FEE similar 1.75% but the Eqis allocations use a mix of institutional funds - some of which have high annual exp ratios of +2% and yet the net returns over this period of market up over 100% - and -due to my age- my allocation has returned approx just 20% - albeit with just a 1/3 drawdown compared to the market's -35% in Feb/March 2020.
My Spouse is 7 years younger, and had a slightly more aggressive allocation with better returns-approx 50% of the market -also with a drawdown approx -13% over the Covid decline when the Spy dropped -35% peak to trough.
So, Risk indeed matters, and protecting one's assets with a reduced Risk level as one nears the day when an income from a job is no longer there- and one wakes up living on social security, savings, and what one has put away for retirement-
I realize i'm a rarity- My health allowed me to maintain a blue collar construction job through age 70, delayed taking SS for several years past 66- and find that we live today without any debts- and can actually meet our typical expenses with the higher income from the delayed SS benefits . This is not the typical $1,400 average payment many receive- and i was just fortunate enough to have my employment and health to remain consistent - until I opted to leave the work at age 70+ due to the potential for bringing covid back to the house - Dec 2020- 2 weeks after I left, the remaining team all contracted Covid, but all have survived. I couldn't take the Risk of bringing it home -

For those few people that have periodically browsed here - FWIW - I plan to continue to periodically post here ;
And with a reduced funding-I can perhaps focus on fewer "trades " . My present inclination is to resort to short term trades based on the 1-2-4 hr time frames- and not relying on the wide swings in the daily charts.

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10-8-21 Futures flat awaiting the jobs report pre market

Futures turning Up on the jobs report! Perversely, it sounds that a weak jobs report allows the markets to think that the Fed will be slower to
announce rate cuts?
Repurchased DVN -and added to RRC on the break higher with buy-stops/limits at the open-Hmmm-edit- I intended to ADD to double my existing profitable RRC position- but apparently misread the IB platform small order format- and sold the existing position- I repurchased the new position....but not enough freed cash to enlarge the position.
Oil/energy plays- both of which have delivered nice gains in the past week- As part of an active trade, I'm applying a tighter stop loss using the faster time frame charts as a guide-anticipating potential volatility swings-
LYV stops out for a loss.
Markets turning into the Red @ 9:40 am! Will see how things develop after 10 am....10:00 markets flat- digesting the labor report
Ford breaking higher! (position) GM continues to trend (not a position)
Nat gas FCG-Energy XLE breaking higher- Commodities all moving up - Russia- RSX gap higher. (limit order did not fill)

10 year yield 1.60% - Will the markets/Tech be able to see upside as rate yields rise? Just because we've had historically low rates, do the tech/growth companies valuations remain too extended in a higher rate environment even if the 10 yr eventually rises to 1.75-2.00% ? And what about a rising dollar? A negative to sell US goods to others.
Added back FCG on the breakout- (Nat gas play) should have boughtr it technically yesterday on the bullish upturn .
Early in the Day, but Energy and financials are the leaders so far today- I do have positions in Both sector indexes XLE and XLF- But primarily overweighting the Energy space this week-


With having been retired since last December, I've had the "advantage" of being able to be more active in participating in the markets- Both a Pro and a con I think, but I've also become more acutely aware of how a market rotation can quickly toss one market segment aside for any reason- In general terms, we saw Tech dominate early into Feb, and then valuation concerns saw tech go out of favor, and value came into play- Tech positions saw large drawdowns - and then sub groups got run up and then sold off- infrastructure and perceived areas to benefit from a Biden administration- and many of those fell out of favor- it's the 4 step rolling market cycle we've seen, with different segments at different areas in that cycle-
It's worthwhile to become aware of what the market is favoring- and what it is losing interest in- and to try to position accordingly- The present surge in Energy - is the best example I can use- Energy as a sub sector of the S&P 500 had dwindled to be just 3% of the S&P- and had been in a decline relative to the S&P since it peaked in 2014. Prior to that , energy had uptrended along with the market from 2009-2014. An investment in the Energy sector- or individual energy companies did well, largely keeping pace with the markets- From 2014 on, Energy positions failed to keep pace with the markets uptrend, and fell hard in March of 2020 on the shutdown due to Covid.
This Chart demonstrates the difference between the S&P 500 (SPY) and one of it's 11 component subsectors- Energy.
Note how substantial the SPY gain over the same period- IF one had elected to stay with a majority of their investments in the Energy sector in 2014 and on- say one loved EXXON or Shell -or other energy dividend payers- One's money lost substantial value relative to the combined diversified index that SPY represents.
Note that SPY holds a cap weighted index- and is not equal weighted over the 505 individual stocks held in the index.


aS I consider how i will approach my trading smaller amounts in my accounts, being nimble enough to exit positions as they fall out of favor- and perhaps following the market cycle to find what is coming into favor- requires active participation and trying to ignore Noise and yet get a sense of what direction the markets are heading-
This exercise today in historical chart views is to get a sense of the market cycle and what comes into favor and what may go out- The next chart - one at a time- includes the RSP-Green line- which is the equal weighted index and favors all companies in the index as having essentially the same weighting. Notice that it appears to Closely follow the S&P 500 as expected.


The next chart adds the technology segment into the equation- (QQQ large Cap 1000)
As can be demonstrated by the chart, TECH has greatly outperformed to the upside as an investment over the long term.


While the above chart demonstrates the relative outperformance large capweighted Tech -QQQ- How did the Equal Weighted Tech 100 do over that same period-? Note the Blue line on the chart! While equal weight in the SPY closely follows Cap weighted SPY, the low performance of Equal Weight Tech vs Cap weighted demonstrates that the emphasis and success and overweighting of the FAANG - The Question to ask: is the capweighted QQQ vulnerable to a major correction if the relative few dominant players - Amazon, APPL, GOOG, Facebook, Netflix are sold off hard? Face book is under senate scrutiny, AMZN under pressure on supply constraints , AAPL at a very high valuation.


Let's look back to a shorter time frame -following the sell-off in 2018, markets rallied into Feb of 2020


going back to 2020:


and the past 1 year! Talk about a volatile sector leading the markets! That Choppy red line is the Energy ETF XLE- up over 80% this past year- but look at the volatility!

Notice the outperformance over the past 30 days in XLE- Since it is a relatively small component of the S&P, it barely adds to the index's upside- but this points to the potential to find areas of market outperformance- But note how volatile this sector can be in the prior chart!


While short term moves show up on the daily as bullish, for example, in yesterday's post the weekly performance had a lot of green with multiple sectors participating - As today is Friday, the leadership roles have reflected consistency on a weekly, monthly, 3 month basis - With Energy and Financials the relative outperformers.


Will those 2 sectors continue to dominate in the weeks and perhaps months ahead?


DALBAR STUDY CONFIRMS MARKET TIMING UNDERPERFORMS
www.prnewswire.com/news-releases/dalbar-study-finds-the-average-investor-return-gap-doubled-in-2021-301362112.html

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END OF WEEK SUMMARY- 10-8-2021

The combined Van Ira and Roth end this week just barely back above $240 k- from a prior week low of $236 k- Not a bad (-4%) net decline overall- with $246 k as the most recent high. But- down for the YTD from the Feb levels.
As I position myself to shift the majority of assets in both of those accounts,potentially in a week to 10 days , I intentionally set stops and sold 2 losing positions for approx a 1k loss today- At our discussion this week with Edelmman, they could roll over individual investments that I desired to retain - but i held both of those positions in the IRA as part of a "diversified " exposure - and i intentionally had not put stop-losses under them - somewhat testing the investment waters. My intent is to liquidate enough positions into cash at the time of the roll over into the Edelman managed account.\

I've been "managing" this larger asset base actively for several years- and I've been accustomed to see account value fluctuations of 2-3K - sometimes in the course of a single day- I've become relatively complacent about the fluctuations, believing I will ultimately "succeed" to deliver higher net gains- My attitude - complacency- and perhaps my unjustified confidence based on a realistic review of performance over the past 7 months ....in my ability to manage a larger account(s) successfully - Having a professional Fiduciary manager - like Edelman- Will ensure that my personal bias will not impede the longevity of the account- Whether it's one's personal Bias possibly negatively affecting performance- or concerns over one's
cognitive functions in the case of a physical decline- It's prudent to eliminate either of those concerns.
In my case, I will be keeping a smaller portion of both accounts to actively continue to pursue investing/trading- It's a past time that I enjoy- akin to playing a chess match with the markets- but i don't need to jeapordize my long term results by underperformance /bias over the long term. Once "Stung" by the markets, it's difficult to not have that impact one's daily perspective- That 'lesson' gets imprinted - and for myself- that has reinforced my application of stop-losses for many years-
Edelman doesn't use stop-losses- instead , they rely on a diversified portfolio (no individual stocks due to the Risk), but they rely on active rebalancing of the portfolio holdings during periods of 5% individual swings in valuations- outside of the portfolio parameters. Ultimately, outperforming and gaining investments are trimmed, and more investments in the underperforming market segments are purchased- While this seems initially counter intuitive- it is based on Trimming- Selling portions into strength at the highs, and Buying others at the lows.-
This counter-intuitive approach is not applied by most of us- as we psychologically anchor to our most recent perception of our performance, with the most recent winning trades leading us to believe they will be the big win. We often focus on the wins, while discounting the losing trades. Edelman totally ignores individual stocks- as 49% of individual stocks fail to outperform the markets. Finding- and holding- the very best basket of individual stocks versus simply buying the index- is the ultimate gamble that attracts the individual trader- to individual stocks -
Edelmans approach eliminates the gamble associated with having an individual stock portfolio. It provides a structured market approach designed for the long term.
Ric Edelmans 2016 book- "Rescue your Money" makes compelling reading that supports their approach of staying the course and periodic rebalancing-to actually take full advantage of the market's peaks and troughs. The active rebalancing occurs when an asset exceeds it's allocation % - by a certain amount- and the monies are invested in that portion that may have declined-
As an approx example- if the tech allocation was 15% and it grew to 18%, that 3% excess would be trimmed and invested in an asset that had moved lower- or had not gained compared to the rest of the portfolio- In essence- selling/trimming some as prices go higher, and buying some of the other allocations if prices are relatively cheaper.
The asset allocation model suggested for my age includes 15 different asset funds and a 2% cash - With a
Sharpe ratio of .83 - overall less volatile than the markets-
includes assets representing the 9 style/growth from small cap value, to large cap growth , some bonds,reits, small % to emerg mkts, exponential growth-,new technologies.


I will retain only a smaller percentage of both Vanguard accounts - IRA and Roth- While the majority will transfer to Edelman -As discussed with Edelman, the IRA will be invested in an age appropriate allocation 70-30- stocks-bonds, but the ROTH will be invested with a greater focus on Growth- Since the Roth is not affected by the RMD's at age 72- it is immune to any future taxes - It will have a greater exposure to market volatilities- Since I do not have to take RMDS from the Roth, and don't expect to have to make any withdrawals from it over the next 5-10 years, it potentially could grow at a faster rate than the more conservative IRA.

For those with some working years remaining- i strongly suggest to be sure to maximise the Roth account - after one gets any employer match!