这篇文章说：经济环境格局改变了，比2018年的股災厉害多了，现在指数上杨25%，但是现在股票价值并不比2018年便宜。现在不是要去买，而是要去卖或者说是辟风险。
“February and December 2018 we were on a buying spree. We had a high-enough conviction to buy the dip.”
SeekingAlpha.com
Offense (Stock Picking) Wins Games But Defense (Risk Management) Wins Championships.
"We cannot change the cards we are dealt, just how we play the hand."
Don't Miss The Forest For The Trees!
This is the first part, which is focusing on the big picture. After all, we always say that Macro Trumps Micro, and we will get to it down the lines.
Summary
I can honestly tell you that this is the craziest market I've ever seen, and when I say "ever" it goes back to the mid 1980s, before the Black Monday crash on October 19, 1987.
I have never seen anything like what we've seen over the past month, and the way I describe the current market as "2008 on Steroids".
"R" is the key letter right now. While everybody seems to be focusing on the Recovery - when, where, or who - we focus on Risk.
For some of you this may only sound semantic, but in reality this is the difference between those that are currently looking what to buy (how to gain), to those that are mostly focused on what to sell (how to avoid losing)...
This is the difference between those who choose to keep playing offense, as if nothing has changed, to those who currently work on ensuring that their team is playing a better defense, because everything has changed.
Over the past few weeks, we have been mostly building, strengthening, and raising the protective/hedging fences around our portfolios.
Let me say it loud and clear, right at the beginning of this article:
Offense (Stock Picking) Wins Games But Defense (Risk Management) Wins Championships
Offense (Stock Picking) Wins Games But Defense (Risk Management) Wins Championships
I Really Don't Understand You People!
Seriously, I'm looking at many articles that keep getting published on this platform and 90%+ keep telling you what to buy, more or less in-line with the average percentage that we see here in good/normal times.
I've already touched this buy/sell ratio in this post, and personally, I find it strange that an analyst only has BUY ratings, with hardly any SELL ratings.
Thing is, this is neither a good nor a normal time; far from being that! Therefore, acting as if this is similar to February 2018 or December 2018 is, in our opinion, both foolish and frankly, irresponsible.
This time is different!
And these are not only words of mouth. I'm telling you this based on where our skin in the game was (back then) and is (right now). Ask any Wheel of Fortune subscriber who was with us back then, and he/she will tell you that during both February and December 2018 we were on a buying spree. We had a high-enough conviction to buy the dip.
As a side note let me also say that (back then) neither the market was as expensive as it is now, nor the reason/s behind these corrections were similar to the one/s behind the current one. This crisis is neither solvable by printing money (even if the amount is en-route towards a 14-digit number*!...), nor is it going to have a "temporary" effect on the economy.
For those that already lost (mathematical) track, a 14-digit number needs to be equal or greater than 10-trillion, i.e. >=10,000,000,000,000
The trillion dollar question: what does a trillion look like?
I'm not saying that this is going to become "The Great Depression 2.0" (I surely hope not), but I'm saying loud and clear: This is a game-changer and nothing like the corrections of 2018!!!
You may choose to maintain your FOMO, buy-the-dip no-matter-what, type of approach. I know that it has worked well for many over the past 11 (or 50, for that matter) years, but keep in mind that what we experience now is way more serious than 2008, both fundamentally (i.e. economy) and financially (i.e. market).
This time is different!
In-spite of me being (named) a "Fortune Teller", I don't pretend to have the power of telling you where exactly the bottom is. However, I do try to judge the macro landscape and, mostly, to asses the risks that we're facing (as investors) at any given moment. While many are trying to figure the exact level, we're mostly trying to assess the risk/reward profile that the market is offering us, and to determine the level where the potential reward outweigh the downside risk.
Even if the main indices (SPY, QQQ, DIA, IWM) get cut in half, the "downside risk" never goes away. It's always there, bigger or smaller, and what makes a difference is how it stands against upside potential.
With that in mind, let me be very blunt about this: I'm less optimistic (or more bearish, if you'd like) now than I was 3-4 weeks ago.
Again, just to make sure we're all on the same page here, this has nothing to do with how much the market is going to fall/rise from here (in absolute terms). This is solely about how attractive this market is for us to push new money into it right now (in relative terms).
When we analyse the market right now, from a risk/reward perspective, we don't find it to be more attractive now than it was in early March, even though we're looking at 15%-20% lower levels.
Chart
Sure thing, when something is down 20% you do have a bigger upside than you had before the decline. Nevertheless, it doesn't mean that the downside isn't even bigger (i.e. has grown more the upside potential has). Let me explain this in a very simple way:
Let's say that when the market is at 2800 you think that it has ~20% upside (to 3360) and ~20% downside (to 2140). Now, let's assume that the market is down to 2600, and you now see ~25% upside (to 3250; i.e. you do expect the market to rise, but less than you thought it would before).
Is the fact that the market is now trading at a lower level (2600 vs. 2800) and offering a greater upside (25% vs. 20%) alone sufficient to call it "more attractive"? We say no! Why so? Because it very well may be that the 20%/20% (upside/downside) ratio that you initially saw is now worse than it was before.
Imagine this: The upside (from 2600) to 3350 (25%) is also accompanied by a downside to 1800, or -31%, below the current level. So now the risk/reward is 25%/-31%, i.e. worse than it was before, in-spite of the (absolute) lower level of the market, and in-spite of the (absolute) bigger upside potential.
"We cannot change the cards we are dealt, just how we play the hand"
We will get back to this beautiful quote at the bottom of this article, but for now allow me to rephrase it, adopting it (my way) to the investment world: When the macro landscape changes - the micro stock-picking/trading method must change along too!
Is there anyone out there who truly believe that the macro landscape hasn't changed over the past two months? Is there anyone out there that does't see the need to be more cautious, to put more emphasis on playing defense?