These are Uptrends my Dude

January 28, 2023

Remember in the first half of last year, it was only the Energy stocks that were in Uptrends.

You can use a simple 200 day moving average to point to and say, "OK price is above that so it's probably not a downtrend".

Then in October, we were talking about how Bear Markets are a choice, and one that investors didn't have to sit through if they didn't want to.

By that point, Healthcare was already being added to the list of Sector Indexes that were above their 200 day moving average.

So now entering Q4 you had Energy AND Healthcare.

By November, you then had 3 more added to the list of uptrends: Financials, Industrials and Materials.

To be clear, the list of Sectors in uptrends kept getting longer throughout the 4th quarter, not shorter.

And so now here we are, with all of those sectors still above their 200 day moving averages. But you can also add Technology and Communications to that list as well.

Yes I'll say it again, Technology and Communications - some of the worst performing groups in the world over the last couple of years.

Let me ask you this:

Are we seeing more stocks going up? Or is the list of stocks going down getting longer?

Are the leading sectors holding in the best rolling over to catch down to the losers? Or are we seeing rotation into the laggards that are catching up to the former leaders?

Come on guys.

It's all right in front of us.

This doesn't have to be hard.

There are people still waiting for their stupid computers to tell them that it's time to buy stocks.

Those of you following along have been doing so since last summer.

Thanks for all the kind words, by the way. It really means a lot.

I'm thrilled that you guys are crushing it.

But remember, yesterday's home runs don't win today's games.

We want to keep printing money. That's our job - to extract cash from the market, and do so consistently.

Looking for trades, investing in the direction of the underlying trends, managing risk, etc - all that is great.

But diversification is also very important.

And most people are not diversified at all.

"JC, but I own large-caps, small-caps, emerging markets, and Europe. I'm diversified!".

Nope. That's the exact opposite of diversification. You just own a bunch of stocks. They're mostly going to move up and down together, if you haven't already realized that.

Real diversification means having different strategies that are uncorrelated with one another.

In my case, I have my liquid long/short accounts, I have my retirement long-only accounts, I have real estate, I invest in venture capital and private equity, I own NFTs.

I've got a lot going on. But in a lot of those cases, they're correlated with one another, even to some extent.

So having a piece of the pie that just collects income, and does not move at all with the overall market, is the perfect compliment to the other things I'm already doing.

Having my income account that just pulls cash regularly helps me be more aggressive in some of the other stuff I'm doing, while at the same time helping me sleep better at night knowing that I have different strategies doing completely different things.

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Cheers,

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