I don't try to catch tops. I don't trade often. I don't care about the news. I don't take stock tips. I don't talk to the small companies that I am invested in. I don't have analysts. I don't read Wall Street research. I don't come up with new ideas often.
What I do is rather boring in nature compared to the classic image anyone may have in mind for an investor. If you find excitement on a daily basis in the markets odds are that you have either not been doing this a very long time or are going about it the wrong way, which means you won't be doing it for much longer. In either case, it is a sign of being a greenhorn.
There are moments of excitement, of course. Times when a company I am invested in makes an announcement that solidifies my thesis. Or when I discover an opportunity for the first time and the hairs on the back of my neck literally stand up. That excitement, however, is based on validation of my work as opposed to fluctuation in capital. That is what separates the boys from the men in this poker room.
March has been one of the least active months I have had in the markets for sometime. This lack of activity is inversely correlated to the powerful gains the portfolios have experienced during the month. You see, when a portfolio of stocks is functioning properly, the only thing an investor should do is observe from a distance. His hand should be far away from the buy or sell trigger as rhythm in the markets is as valuable an asset as anything. It takes only one reckless act to disrupt an otherwise harmonious portfolio of investments.
The harmony I am experiencing here is reflected in the results. I don't have an opinion regarding any market top because I know that nobody can predict them in a powerful bull market. The only opinion I have is regarding the progress of the companies in the portfolios. As long as they are performing well in terms of price that is backed up by growth in the fundamentals and execution by management then who am I to stand in the way?
There will come risk/reward setups that favor one investment over another. I don't mind rotating into companies I am familiar with that seem poised to do better than other companies I am familiar with. A recent example being when I recently reduced CIDM to a small position in February in favor of getting into IWSY and SPNS. A reflection of my never ending quest to find the best risk/reward setup at any given moment.
If you are confident enough in your ability to control risk in a portfolio of stocks without depending on feel good terms that only bring a false sense of security like "diversification" and "asset allocation" then you will be fine. When the market tops you will simply raise cash to the point of comfort. You don't base your entire existence on working around the prospects of that top arriving.
I will be posting a weekly chart review at the end of this week. My opinion on the market remains of a bullish nature.
