We do not make end of 2018 forecasts. I think it's irresponsible to think that we have any idea of what will happen a year from now. We want to reevaluate our thesis as time goes on and new data comes in. This reevaluation process occurs consistently throughout the entire year. How else can we manage risk responsibly? Are we supposed to place our bets after New Years and just hope for the best? Come on.
Take a deep breath. Forget everything we did this year and only think about where we are today. The idea is to keep an open mind and keep every option available. If we've loved something in 2017, that doesn't mean we can't hate it in 2018. Just because we've been shorting something this year, doesn't mean we can't be buyers in the next coming quarters. We're not here to be right, we're here to make money. We can't forget that and let ego take priority over profitability. It's important to be aware of our cognitive behavior patterns and this is one of them.
Lastly, we want to ignore what the year-to-date returns were for different asset classes. I think the arbitrary Jan 1 to Dec 31st performance doesn't help us identify the direction of primary trends. So to point out that because one asset did better than another asset throughout 2017 does not necessarily mean one is in an uptrend as the other is not. We want to judge each and every asset on its own merit whether it is a stock, index, sector, commodity, currency or intermarket relationship.
Today we will be focusing specifically on the stock market. We'll go sector by sector and bring in what we're seeing internationally to develop a thesis. Then we'll break it down to individual stock ideas with favorable risk vs reward opportunities. Don't think of this like we need to buy all of the stocks mentioned here. It's really to get an idea of what we should be looking for, and then if there are some of these specific ideas that meet our objectives and risk parameters, then even better!
We're here to be very selfish and picky. This isn't about giving all of them a chance. We're here to only buy the best stocks that we feel meet our specific goals. They are different for all of us. Here I am presenting what I think tells the story for the current stock market environment and then point out specific pockets of strength so that we can try and profit from them.
Ping me if you have any questions:
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