I have spent the last 4 years primarily investing in my community by building a 5 star local service business that provides exceptional service and quality with integrity. I did this for a few reasons -
1 I saw a need in great demand.
2. I was providing the same service in a contracting role, that was a very unhealthy arrangement and chose to make a bad situation into a positive.
3. I had gone through a devastating divorce a few years earlier and saw building a business as a path to personal and spiritual growth/healing.
4. I believe in small business and that investing in your community is one of the best investments you can make.
5. We were in a bull market and economic business cycle that seemed it could continue for a few years or more.
In spite of having a great reputation with all 5 star reviews, being an A rated, BBB accredited business within one of the fastest booming local markets in the US, I began to see signs of a change in the long term business cycle well over a year ago reflected in my business and that of others.
Meanwhile, the markets push to higher highs and the pundits, talking heads, masses, self styled experts, media etc all are mostly in agreement that we are in a never ending bull market.
Now, before you shut down your brain and start to resist, let me indicate this is not another post by a "perma bear" who has called a crash for 5 years.
My forte and preference is long term investing and if you look at any 100 year market chart you'll see that a bullish bias is rewarded in the long run.
I have traded, invested in and analyzed markets for over 20 years. I have a gift for pattern recognition, spatial math and a passion for divorcing emotion from the process.
In my mutual fund model (which is soon to be funded and open to investing of real capital), compliance dictates that I must maintain a minimum of 80% invested invested in equities and ETF's, with a maximum of 20% cash allocation, and no shorts.
This means that regardless of market conditions, I am 80% long at all times. The exception is that I can hedge through $VIX and short biased ETF's to some limited degree.
As a trader, I am agressively long in uptrends. My point is that when someone is long in all market conditions (very successful in consistent long term performance) and agressively long in short and medium term time frames, and who has a perspective that is also based in a hands on interaction with economic and business cycles begins to talk of a change, it would be beneficial to your capital preservation and growth to at least listen and consider with an open mind.
Even better, would be for you to apply critical analysis of your own to the points presented and come to an unbiased perspective of your own.
Alas, today many people would rather be fed their thoughts by others, social media, and news propaganda. Critical thought and analysis are dying and education has become of increasingly lesser quality in the US.
My goals here are to present an unbiased perspective, get you to think for youself, engage in constructive, intelligent discourse and stop making investment and trading decisions based on emotion.
Emotion is a tool used to cloud your judgement, push you into the wrong decisions at the wrong time, and take your hard earned money.
Certainly you should aim to see the emotions evident in current market and trading conditions but you should not be swayed or clouded by them. They are only clues.
Your trading and investing should always be based in math and the discipline to execute.
Market conditions change and if you continue to blindly execute your strategy based on the emotions of a long (manufactured) bull market, there will come a time when you begin to lose money hand over fist.
If your strategy does not consistently perform through market ups and downs, with continued account growth, lacking big volatility and major drawdowns, it may not be working anymore.
This is a hard concept for people to grasp when they have been in a market that doesn't have a major pullback for years.
Darwin's primary requirement for survival of a species and one that humans have in spades is adaptability to change. Trade your system consistently, yes.
But be aware when market conditions change, the math continues to not add up, and it is time to change and grow.
I have heard many bullish perspectives on how the $SPX is up 50-60% over the last few years. For the last 15 months it has moved almost nowhere while swinging in a wide range.
People come to opinions by cherry picking the data that supports their bias in favor of what they WANT to believe.
On January 1, 2018 SPX - 2789.80. Friday March 22, 2019 SPX - 2800.71. Is this a long term top? Is it a large rotation?
I can't predict the future. No one can. If they say so, they are like trying to sell you a $5000 mentorship or a $3000 a year newsletter.
What I can say is that my fund is at around a +31% gain being primarily long in that timeframe. I did this by having a long term strategy but making adjustments and adapting to changing market conditions.
Until around 20 years ago, the stock market as a whole, as well as individual stocks, traded in four phases or conditions - accumulation, markup, distribution and markdown.
With the advent of increased computing power, algorithmic and high frequency trading, more arcane & obscure Fed intervention, social media, artificial intelligence, increased global internet access etc, we have morphed into a more complex structure containing new market conditions that often manifest differently over different time frames.
It is increasingly important to see the big picture and be aware of these.
Here are 6 ( there may be more that I am as yet unaware of ) :
Bottoming - sideways
Platform - sideways
Moderately Trending - up or down
Velocity - up or down
Trading Range - sideways
Topping - sideways
Are you aware of the current market condition?
More to come. I have been wanting to start a stock market blog for awhile, but the dramatic change in the business cycle has created a demand on my time split between managing the changes in my business and managing my fund and personal trading/investing/research.
For now I will blog on my business website as my business may soon morph into something completely new and different anyway. The domain was chosen with the short perspective of relating to my current business but the long term perspective of being able to grow into something more.
Remember - Trade what you see, not what you "know".
Scott Blasczyk