When In Doubt, Get Smaller
It's no different in the market.
Sure, these sexy growth stocks, and solar and SPACs and Crytpo and all that is great for the story tellers. They make the story-telling process very easy.
As a consequence, it makes investors vulnerable to fall prey to those stories.
We can't help ourselves. Humans love a good story. That's perfectly natural.
But are you here for a bedtime story so you can sleep well at night, like a child? Or are you in the market to make (and keep your) money?
I'm here for the second one.
When your offense is on the field, you want to call your offensive plays. I learned that from Tony Dwyer - shoutout Tony!
Sometimes, however, your defense is on the field. And that's the environment we're in now.
How long will this take? I don't know. Could be weeks, could be months, could be quarters. I have no idea.
But what I do know, is that if Staples are outperforming, Treasury Bonds are outperforming, Aussie/Yen is rolling over and Small-caps, Micro-caps, and Mid-caps are below their February highs, it's our Defense that's on the field.
I like owning Treasury Bonds in this scenario. If $IEF is above 114, it's a long.
What about everything else?
The lesson I learned many times, the hard way, was that whenever in doubt get smaller.
This is the type of environment where it's easy to get "chopped up".
Breakouts tend to fail. Breakdowns tend to fail. Sideways, frustrating markets all around need to be recognized.
That's what this is.
Are you getting chopped up?
Or are you getting smaller?
JC