Investor Spotlight

Take a Vacation

I took several days off this week and headed out to Disney Resorts for some fun and relaxation with the family. I wasn't too concerned about the market. It's not going to go gangbusters without me. I had already migrated to CASH gradually as of October 5th. That has been my consistent message for the last several weeks in my blog posts. The only thing to do now is just prepare a good Stock Watch List and exercise it when the market conditions improve.

Market has been very ugly since October 5th. That's is the day when the $SPY(proxy for general market performance) as well as the $QQQ(proxy for growth stock performance) sliced down the 50 day sma(moving average). We have lost all the gains that we made this year and more. Lessons learnt is to pay a very close attention to the 50 day sma and the "Market Pulse" that's mentioned by the IBD(Investors Business Daily). The tone of the market had changed by October 10th when the IBD indicated the change in the "Market Pulse" to "Market in Correction". That's is a signal to tell the retail investors to start migrating to CASH and preserve the portfolio from eroding any further. At my IBD Meetup group on October 9th I had alerted to the members the seriousness of the train wreck we were facing. By the following day, the $SPY as well as the $QQQ had both sliced down to the 200 day sma.

Ouch! Ouch! Ouch!

Migrating to CASH gradually from October 5th to the 9th would have allowed you to mitigate losses from the current loss of -13.5% in $QQQ to only -3% from the all time highs achieved on Oct 1st. This requires the discipline and following the IBD rules without questions asked. Hoping and wishing for the market to come back is futile. It erodes your portfolio and at worst it shakes up your confidence. Erosion of your emotional capital does a real damage to your ego and it stunts you from making a commitment during a "Follow Thru" day. The last 2 "Follow Thru" days have fizzled but when they actually do materialize, you get some real huge winners within a week to 3 weeks. Preserving capital is the key to spicing up your portfolio.

Plan of Action

In the plains of Serengeti, you will find two male elephants fighting during the mating season. You will hear all the grunts and clashing of tusks between the males. After a fierce fight, some small trees will get knocked down and there will be a dust storm from all their macho shuffling. Grass and other vegetation gets trampled on and destroyed. That is exactly what is happening in the market right now with the hedge funds. On any given day, the $SPY and $QQQ will move 2% from highs to the lows. That sort of volatility will destroy your portfolio. Its best to stay out of the harms way while the hedge funds that are the titans are slugging it out. Retail investors will get trampled on in the current environment. This is the time to just stay out of the market. It is a good time to polish up on your trading skills and read some good books on investing and trading Growth Stocks.

Mentoring Program

Would you like to learn:

How to read the signals that the market gives you so as to avoid the market crash we had in 1987, 2000 and 2008/2009. Learn how to avoid -40% to -50% loss of your portfolio during such a market crash.
How to consistently Outperform the Market like I do?

Schedule a FREE 30 minutes of "Discovery Call" with us to see if you qualify for our program.