In this weekend's 375th edition of Turning Points we have an 11 page note focused primarily on gaming this week's CPI report as the markets remain around key levels.
What follows is a brief preview from this weekend's note:
There are a lot of ways to lose money in this market.
In going through the charts this weekend, this single fact jumped out more than any other.
Investors are increasingly concentrated in just a few names. They also tend to gravitate towards the best performing sectors, whether real estate related, energy or otherwise.
This leaves an enormous number of names that are essentially left for dead, delivering glimmers of hope at random intervals, while persistently grinding towards below average return territory.
2023 has been a year where it has paid to do two things specifically:
1. Be extremely selective about which names and sectors in which you are invested. Being that losing money in this market is such a readily available feature, being diversified is only a ticket towards bringing one closer to performance mediocrity.
2. Maneuver allocations in short-term intervals so as to avoid seemingly random drawdowns like what the markets have faced since the July highs and what they faced previously, at the February peak to the March low.
Normally, in a standard bull market, you want to ride out the peaks and valleys, as you do not want to be shaken out of your positions. Also, you want to be diversified as bull markets typically have a “rising tide lifts all boats” effect.
2023 is something different, however. As anomalous as this market has become, despite the fact that there is some certainty given the understanding of long-term bull market cycles, it wouldn't at all be surprising for this market to deliver downside that could be punishing in nature due to the overall slippery conditions we find ourselves facing.
With that said, it remains extremely important to bear in mind that being selective about where we are invested and continuing to maneuver around potential trouble spots has and will continue to work, potentially insulating us from anomalous circumstances involving sudden downside in the markets during the time ahead.
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