For someone that utilizes a quantitative model and talks a lot about staying unemotional, I have discussed the psychology of investing extensively lately. The October swoon seemed to be telegraphed to me, as was the V-shaped recovery. It has seemed to me that everything I expected happened exactly as I suggested it would! In my experience, and many market cycles ago, when everything seemed “too easy”, that was when over-confidence would set in, and that is when the market would try to put my foot in my mouth!
Warren Buffett likes to say to you can only see who is naked once the tide rolls out. What that means is you could tell who had a real process and whose boat was simply rising with the tide. Right now, most everybody in the markets feels pretty good about themselves and their accounts. This is where one of my favorite Wall Street expressions comes in…”Just don’t confuse brains with a Bull Market!”
I manage several strategies and use different approaches with the various clients I help. I have discussed Magnet in my books, The MAGNET® Method of Investing and Magnet® Investing. The FACTS® model is outlined in Trust Inc. At the moment, I am having a hard time finding good entry points. Not only am I having a hard time buying here, too many of my top-ranked ideas are so overbought, I have been a seller despite thinking the market will grind higher.
It is easy to share what I am buying, but too often things change, and as an “active investor”, I sell when either the Magnet rankings change – or when stocks fail to “act right”. I now find myself with a larger cash position than I normally have. This is not a general warning, just a reminder that if I would not buy a stock at a given time. I often will not sit with it either. I scan my watch lists for good entry points and did find a few today. Don’t label me a “Bear” now by any measure, just humble and thankful–and not greedy here.
Have a Healthy, Happy Thanksgiving!
Longs: Lannett Company, Inc. (LCI), The Hain Celestial Group, Inc. (HAIN), Microsoft Corporation (MSFT)
Shorts: Bristow Group, Inc. (BRS), Mack-Cali Realty Corp. (CLI), Quality Systems Inc. (QSII)
By Jordan Kimmel, Chief Investment Officer at Investview, Inc. (INVU).