Broad Market Outlook
Returning from our 3rd Annual Vermont Retreat between gondola rides and firing rounds off the balcony we worked on a few key problems finding some ancillary benefits to each.
One of the main problems revolved around long term investing.
Stories continued to come to mind as to why its so hard to really hold long term in today's environment.
With the ease of trading (no commissions)
The increase of gamification of trading (RH was fined for this recently)
The fomo of trying to keep up the (market) influencers
Truly holding long term for those 500% to 1,000% winners has become an extremely hard game, almost impossible unless your name is Carl.
When I think of my own trading, there were a few tiny, almost comical investments over the years that today would have turned into real change.
1,000 shares of F at $1 in 2008 that was a long term investment, I sold the next day, today would have amounted to a 60% annual dividend, forget the appreciation of the stock. That $1,000 would be worth $100,000+ today just from the dividends reinvested.
The 500 shares of AMZN from $280 in 2015 that was a long term idea, I sold at $300 a few day later, today would be worth a million dollars.
The worst of them was the few hundred shares of SHOP at $22 that I lost money on that ended up increasing by 6,000% in under 4 years!
To put that in perspective Bitcoin is only up 4,000% in the same time.
What's 1000% a year between friends?
As this conversation continued, I started to think of the successful long term investors I have crossed paths with as an advisor and they all had similar traits.
For one, they were old (retired). Real growth takes time.
Secondly, they never had online access to there account and quite frankly if they saw a statement more then once a year that was a lot.
Third, someone kept them in the market and accountable.
They couldn't just log in and panic sell on a down day, they had to pick up the phone and speak to their advisor who would advise them to do the opposite.
Between the stories of some of my costliest blunders and the success stories of the retired high net worth individuals. Who for the most part all amassed millions of dollars of wealth from extremely small sums of money over long periods of time.
The light bulb started to flicker and by the end of the weekend, we formulated a plan to test the idea out.
Its hard to separate the mental aspect of trading and investing, even with separate accounts, once logged in, its difficult to separate church (trading) and state (investing).
Step 1 - open a taxable account at TD, fund it however you see fit, $500, $1,000, 1% of your trading account, any amount that you basically could careless about.
Step 2 - link your checking account and set a weekly saving at 10% of what you are already saving weekly.
ex saving $100 a week, save $90 a week to your other accounts, $10 a week to this account.
Step 3 - pick a stock or stocks you really want to hold long term. Go nuts, pick anything you believe in long term.
Step 4 - this is how you will actually hold long term, you will share access to the account with us (very easy at TD simply a click of a button), then we will change the password. So you don't get tempted to peek in the account. If you want to see how its doing, we will send it obviously, however the idea is to get the money invested and let it work, without the micro managing we do as traders.
Step 5 - as the cash in the account builds weekly, when you find the next stock you want to buy or add to your current position(s), you let us know and we will put the order in for you.
Step 6 - the goal is to hold your investments for a min 500% gain before selling.
I have already funded a separate account, have a buy stop set for BABA (my first stock in that account) and a member on the trip has changed my password, so I cannot access my own account without speaking to him. Yeno is now my broker and we can be yours for this account if you would like so.
I will go over this topic in greater detail in a lesson that I will send out later this week.
If this idea sparks your interest, let me know and I can give you some more detail to start this sooner then later to see if we can all find our next million dollar long term trade.
Macro Rotation Outlook
MDY Mid Caps
IWM Small Caps
Sensitive - sectors that have moderate correlations to overall market conditions.
Cyclical - sectors that are more sensitive overall market conditions.
VCR Consumer Discretionary
Defensive- sectors that tend to outperforming during sub par market conditions.
VDC Consumer Staples
IBB Bio Tech
Big Picture Set Up
ABC had a monster weak this week taking out its recent pivot high, this name is a wide and fast mover. Taking some off up here can be smart, stop wise either vs $100 or $94 are two spots to consider.
We should see a retest of that prior all time high of $120 sooner then later.
CRM is showing us for now there is still a buyer holding this $215, will buy above $223, if it gets back near $215 again, that buy often gets weaker with time, not stronger.
By far one of the luckiest stops in a while as that $220 area held perfectly as it continues to work its way back to the retest.
Turning a bad trade into a good one, last week I went over how I missed my $48 out and had to give it room to put in a pivot, FAST pushed a dollar lower and show us $47 was the proper out. Holding now vs that out.
Above $272 HD would be taking out its prior pivot high, given it has not been able to do that since October, that can be the sign that the short term downtrend is changing pace to work on getting back up near its 52 week highs.
PG flagging tight under this $140.