Confused about your Investments?
That's why you need a routine
GOOD MORNING
BOMBS FLYING. INTEREST RATES RISING.
TRUMP STORMS OFF INTERVIEW. CALIFORNIA ELECTIONS
KNICKS UP 2-0
It doesn’t matter what you are confused about. Whatever is overwhelming can be better managed with an objective routine.
With elevated stock gains, it’s only a matter of time before a big sell-off goes into the weekend.
It happened on Friday after better-than-expected jobs numbers.
That’s good, I think, since people are getting jobs. But it’s bad because more people with money will pressure the Fed to keep interest rates higher for longer.
Of course, that’s “good inflation” if it’s sustainable. For me, what I am studying is whether it’s sustainable.
Folks who are not really into anything the White House has to say or espouse are entitled to their viewpoints, which vibe with conventional wisdom like this, but use words that are easy to creep into your subconscious without thinking acutely.
What do you notice?
“Bizarre”
“Live with inflation.”
“Fake success”
“Detaches from economic reality”
“Crush the working class.”
Maybe it’s accurate, but these are charged accusations without a system or data to back them up, just hunches.
There is no guarantee it will help, but data will help you build on the day-to-day movements of markets, and you will be able to observe what works, what doesn’t, and how you react.
Let me show you a real-time example of this regarding the stock market.
For me, I have found the financial markets a great representation of everything about the world. When money is on the line, all the forms of human nature will emerge.
On May 6 the markets were surging and many investors were either amazed of their windfall profits while some were cautious that a calamity is right around the corner.
Both emotions are irrelevant to my way of thinking, since it works on some feelings they have rather than the reality of the matter.
The article I wrote can be found here, where I wrote that the market extremes are being seen in the underlying data
Here is a current chart of the S&P 500 through the ETF SPY
From May 6 to now, it basically didn’t do anything with the one-day selloff on Friday.
I didn’t predict anything, but I observed that it was probably not a good time to follow the trend.
But we are human and mostly took investments in May so I had an idea for you by just using the data
To compromise passions, I suggested hedging.
Hedging is when you buy one item while selling a related item that should perform worse.
(Where the term and origin of “hedge” funds. But taking 2% and 20% on a hedge is quite expensive, and so they began to take directional bets)
The idea was to be
Long SPY (or popular stocks) and Short EWU (the index of UK stocks)
A much cleaner and better performance as you can see
I didn't short EWU because of my disagreement with policies in the UK, but because of the market’s disagreement with demand for its underlying shares.
This is one example.
If you want to learn more or go more in-depth, subscribe and you’ll get my ebook on how to use it, along with live webinars.
I enjoy writing and what I share has value, but when you want to dig deeper, there is more for you to explore.
Make it an enjoyable Monday
Eric