Tactically bullish stocks
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David,
I still find your massive flip to extreme overweight from moderate underweight equities strange. You cite a couple good reasons (e.g. fib levels and lessening sanctions) but there were more reliable signs that it was time to go long, like when you saw that investors had capitulated back in June-July. There was so much bad news and data back then but the portfolio only maintained a moderate underweight. To go from -7.5% to +15% (using leverage, too) is not something I've seen on this blog since I've joined.
I would have liked to see more supporting evidence for the change in view (although I would prefer you not start with a conclusion and work backwards to find more) for…
Regarding the US domestic politics, I agree Biden administration did a poor job and I personally really don't like those progressive democrats. The FBI raid is most likely political motivated and it would increase the internal conflict of the country. However, I feel the approach Trump took is also aggressive and divisive. In some sense, himself and his allay attack liars by making new lies. Say, if he won 2024, I don't see the country become more harmonic in any chance. Maybe the country needs a new leader, capable but less dramatic.
Great discussion. I 100% agree with your view on inflation and in the medium term much higher rates than expected by the market. I think your points at the end on the disintegration of US faith in its fundamental Government and democratic institutions is really key. I worry about the political pressure that is going to be put on the Fed post the November elections when, in the scenario we share, the Fed is going to have to crank up its tighten regime.
I watch a batch of those meme and highly sentiment driven stocks, when they stop going up, stock market will probably stop going up. Some shakey ones today, but some crazies as
Hi David, a couple thoughts/questions -
I thought it was established that any overweights would need to be funded with underweights in other sectors - here you are borrowing 7.5% in cash which seems to be breaking that rule. Wouldn't you have to move to 25% bonds in order to be 75% equities?
To follow up with 1., are you at all worried about the fact that you are flipping positioning quite hard, with the markets having gone up a ton in the past month (I am thinking about the old adage that says to never chase). I would also like to be involved in the upwards momentum but I have seen the benchmark portfolio against my 401k move up…