I’m bullish. I’m bearish. I don’t really know. I don’t really care.
These are all acceptable answers to the ever so popular question, “So what do you think about this market?”. But what does that question really mean? It just depends on your time frame. Remember there is a big difference between being right and making money.
I talk to investors all the time: Individuals, Stock Brokers, Buy Side shops, etc. Everything comes down to time frame. I have a friend who’s owned Boeing stock for 20 years. Do you think he cares about the 2 day sell-off earlier this year? Some of my buddies are day traders. The last thing on their minds is where the 200 day moving average is on hot stock of the day. But a few of my broker/RIA buddies really focus on the 200 day (or 40 week or 10 month) moving average. Again, it just depends on your time frame.
Last weekend, I was ripping through our global stock screener looking at the major averages around the world, from Europe to Japan, to Egypt and Indonesia. For the most part, they were nothing but bullish to me. As much as I wanted to be bearish and “nail the top” to this market, it just wasn’t there. And if there’s anything I’ve learned managing money and playing baseball, it’s that you can’t force it. If it’s not there, let it go. The trade/pitch will come. And when it does, let it rip. But wait for your pitch has to be the best advice anyone has ever given me.
With that big picture bullishness in mind, this week got a little hairy in the short term. We started to see divergences in some of the leaders for US Stocks. Small-caps, Mid-caps and Transports weren’t confirming what we were seeing out of S&Ps. That worried me in the short-term. But back to timeframes, it doesn’t change what the global stuff last weekend was telling us about equities.
There are plenty (too many?) investors that don’t care about a 20% draw-downs in their portfolios. I personally can’t afford to have that. I can’t afford to have anything close to that. So yes, in the short-term I have to worry about the little things, but while always keeping our big picture outlook in mind. The bigger trend will dominate anything in the short-term anyway. In fact, by the end of this week, small-caps and mid-caps closed at new highs. Transports didn’t, but they’re close.
So yes, big picture am I bullish on US Stocks? Absolutely. Short-term? eh…
I think some of the better risk/reward setups are outside the US. But that’s me personally and that’s my time frame.
So when you ask yourself, or someone asks you, How do you feel about this market? First ask yourself about the time frame. You mean like in the next minute? Tomorrow? Or over the next several quarters?
There’s a big difference