During Periods of Heightened Risk, Defense is as Important as Offense

Jordan Kimmel  |

Most people usually consider me too bullish. That is because I was willing to look past the negative media over the recent years. We have been in a great bull market, despite the tremendous pessimism of most individual investors and fearful Fed watchers. The market climbs the “Wall of Worry” during times of pessimism. It is often good to go against the “odd lot traders”. In fact, over the 25 years I have been in this business, the only time the public was wildly bullish was right near major tops.  

The highest rated Magnet® stocks have recently enjoyed great runs. The growth of revenue in biotechs and semiconductor stocks have attracted lots of hot money and have become extremely overbought. I had the good luck recently to be “tipped off” by a very novice investor that semiconductor stocks are a good place to invest. That reminded me about the shoe shine guys and cab drivers giving stock tips at the high in the 1929. I quickly cut my exposure and our managed Magnet accounts are now over 40% in cash. Last week's high volume sell-off in the “hottest sectors” should give you some indication that the easy money has been made–the last 5% of a bull market is the most dangerous.  

This has been a great market for me and I have taken a lot of heat from friends and colleagues alike for the last few years. I have cut back on my long positions, raised cash, and have taken positions in ETFs negatively correlated to the market. I still suspect we hit DOW 20,000 before the next real bear market rolls in. However, I have recently shared that I have personally taken several defensive measures. I am also reminding you of another important Wall Street saying: It is dangerous picking up pennies in front of a steamroller. Strong defense here is as important as a strong offense. Be careful.

Longs- HD Supply Holdings, Inc. (HDS) , TASER International Inc. (TASR) , Walgreens Boots Alliance, Inc. (WBA)

Shorts- using negatively correlated ETFs

By Jordan Kimmel, Chief Investment Officer at Investview, Inc. (INVU).

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
HDS HD Supply Holdings Inc. 37.37 0.88 2.41 187,609 Trade
TASR TASER International Inc. n/a n/a n/a n/a
WBA Walgreens Boots Alliance Inc. 77.03 0.81 1.06 755,524 Trade

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Symbol Last Price Change % Change
AAPL

     
AMZN

     
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JPM

     
IBM

     
BA

     
WMT

     
DIS

     
XOM

     

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