Portfolio Strategy Update:
As long-time members know, we don't spend a lot of time (almost none, actually) touting our views on the market or making "calls" about what to expect next. In our more than 40-years of combined market experience, we've learned that such efforts are at best a fool's errand and harmful to investors. You see, no one has been able to consistently "call" the market for any extended period. As such, we prefer to utilize a rules-guided approach.
With that said however, we are growing increasingly concerned about the mounting evidence regarding the potential for the current corrective phase to morph into a cyclical or "mini" bear market. While such declines have historically been shorter and shallower than your "average bear" (-23% vs. -32% on average over 8 months), we believe it is important to try and lose the least amount possible in our portfolios during bear market cycles.
So, despite the current rebound and the strong seasonal backdrop, we will be looking for opportunities to reduce exposure to risk. This was the primary reason we eliminated our position in QLD. By swapping the NASDAQ 100 index for the S&P 500, we reduced the beta of the overall portfolio. We expect to continue to take such action in the coming weeks.
The good news is that the BEST opportunities for gains in the stock market tend to occur as bear markets come to an end! So, while the coming months could prove challenging, keep in mind that a meaningful decline will likely lead to the next big bull opportunity.
The State of the Markets:
It's the first Friday of the month, which means it is time for the Big Kahuna of economic data - the jobs report. So, without further ado, let's get to the report and review ...
