Here is how I am currently invested: I will be updating this portfolio every month on this blog to track its performance starting at todays stock prices!
Very Long Term Investments: (will be holding for 5+years)
Stay at Home Trades
Re-Opening Trades
Innovation Trades/Investments
Other:
LISTEN INVEST WIN
Wow what a year we have had so far in 2021! The Innovation trade started off like gangbusters, and has since fallen apart, energy started off strong and has taken a back seat this week big time, and financials ruled the day yesterday, and today they are all down!
There seems to be a few different camps of bulls, and then of course you have the bears out there, all fighting for what to invest in or where to put your money. It would make any professional trader lose their mind. Lets look at some of the dynamic ideas out there:
1) Innovation trade:
These high flying, high growth stocks with either negative earnings or insane p/e ratios had a tremendous 2020. These are stocks like Tesla, which was up over 600% in 2020, Zoom, Peleton, and Teladoc. Basically you can summarize this group as stocks that Cathie Woods is invested in in her ARK funds. If you have not heard of Cathie Woods, she is the founder of the ARK Investment Management group, and many many people refer to her as a guru after her incredible return for 2020. (All of her funds returned over 100% just last year alone!!) These stocks as a group started off strong, but have been absolutely hammered lately. Some of down 20-35% in the last few weeks.
2) Re-Open trade:
These are the companies that will benefit from the re-opening of our economy. The sectors in this group include Energy, Financials, Materials, Industrials, and Consumer Discretionary. This can also be lumped into the Value Investing category, as a lot of these companies would be considered Value Stocks. This has been the winning trade so far this year, Energy is up 30% YTD, even after falling pretty hard this week. Yesterday alone Energy was down over 4%.
3) Yield trade:
Yields on the 10 year and 30 year have risen to their highest points in more than 15 months, which rates on the 10 year expected to hit over 2% soon. This has driven money into the financials and away from Tech, especially the Innovation trade. Big Tech (Apple,Microsoft,Netflix,Google, Facebook) have all been hit hard over the last month because of this. The theory behind this is that companies that rely on a lot of debt and credit to fund their businesses and keep growing, will not be able to borrow less because debt is getting more expensive. Less investment through debt = less growth. This is very true, and its why tech has been clobbered lately.
4) Bear trade= market is completely overvalued
The market is trading at all time highs, with relation to p/e ratios, and a slew of other metrics which point to a near term correction of 10%+. While its definitely possible this is the case, Bears have been saying this since the DOW was at 20,000.
Always remember whether you are investing or trading. If you are a long term investor, the market will have its ups and downs and the intermittent noise doesn't affect you much. If you are looking for a short term trade and its gone sideways, a good idea is to always set limits on the downside where you get out, and move on to the next trade.
LISTEN INVEST WIN
