Good Evening, Well…..I guess we haven’t found the bottom yet. Last Tuesdays bounce has now proven to be no more than an oversold bounce in a downtrend. The charts have been signaling this weak action for a while. The fundamentals have been telling us that the market will move up and while that’s probably the case it definitely doesn’t feel like it now. We made a commitment to the fundamental approach to this particular market. So now we’re committed. There is no turning back at this point. We have no choice but to see this though. To sell now would be to lock in losses when the fundamental reasons we held for are still viable. While many individual stocks have entered bear market territory the major indices have not. I think we can all agree that the market was due for a correction but none of us though it would be this deep. Usually when we sell with the charts we avoid all this mess. There is a reason we often say that friends don’t let friends buy and hold. This clearly reminds me why I dislike the buy and hold strategy so much. In recent years and in many of your entire investing careers the market has ignored the negatives while experiencing only shallow dips before heading back up. Those who were prudent money managers and took defensive measures looked like fools. The reason for this unprecedented one way action was all the (also unprecedented) market stimulus by the Fed. Well guess what. The Fed is unwinding that stimulus now and the market is returning to it’s old ways. Those of you who have only traded since 2009 know no other market. Learn from this. Normal markets do not go straight up! They correct!!! This is what normally happens when you buy and hold!! If you want to know how to trade this market from here on out then you need to study the markets prior to the financial crisis of 2008. I could write forever on this topic but I think you get the picture. This is a new game compared to the past nine years. If you continue to trade now the way you traded during that period of time you will get crushed!!!! Speaking of the precious present, we will make our money back in the end and then some but we will have to hold our positions to do it. Given the current earnings and economy that could only be a short time. However, no one knows for sure where the bottom is so it could also take longer. What is lost?? They say time is money and money is time. Not that the current market is crashing but a good example was the sell off in 2000 ending he dot com revolution. Investors that held there positions then did not recoup there losses until March of 2006! Those that sold and reinvested at or close to the bottom added to their principle during those years. By the matter of fact many folks were even forced to delay their retirements as a result of that sell off. Once again, I don’t think that is the case this time! Otherwise, I would not be holding. Nonetheless, a lesson should be learned by all in this situation. This is not that same market that it has been. It is dangerous to assume that you can hold a stock or fund or fund indefinitely. Sell is no longer the dirty word that it has been for the past nine years!!! Panic is not a strategy either!!!! So you need to know when to sell and that is when the charts tell you to sell. You must be disciplined. The character of this market is changing and you must change with it or be left behind. Remember that fact when this current correction is over. This time we lost maybe a few weeks or a month or so. Next time if you don’t heed the warnings in time it may cost you months or even years of lost production. For now I will hold. This market should head up after the elections but even then there is a risk. If the market doesn’t like the election results we could be for more pain. At that point the old adage that says if you want to get out of a hole then quit digging applies. My advice to those of you who are due to retire would be to get on the sideline, lock in your gains, retire and wait until this passes. You may miss out on some gains but you will have what you need to retire. The rest of you have time to regain your lost momentum. Just remember that next time you might not be so fortunate!!!! Stay vigilant. This is a tricky market to navigate. Learn from this and prosper in the future.
The days trading left us with the following results: Our TSP allotment dropped -0.78%. For comparison, the Dow fell -0.50%, the Nasdaq -0.42%, and the S&P 500 -0.55%. One positive thing I will note is the the market reversed in the afternoon and finished way off it’s intraday lows. This was due to investors snapping up beaten up stocks at bargain prices. This type of action is often part of the bottoming process and remember, it is a process. The V Shaped recoveries that you experienced so many times in the past nine years are actually very rare…..
The days action left us with the following signals: C-Neutral, S-Sell, I-Sell, F-Neutral. We are currently invested at 100/S. Our allocation is now +0.18% on the year not including the days results. Here are the latest posted results.
| 10/22/18 | Prior Prices | ||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 15.8989 | 17.6977 | 39.3543 | 49.0666 | 28.4943 |
| $ Change | 0.0040 | 0.0070 | -0.1688 | -0.1648 | -0.1350 |
| % Change day | +0.03% | +0.04% | -0.43% | -0.33% | -0.47% |
| % Change week | +0.03% | +0.04% | -0.43% | -0.33% | -0.47% |
| % Change month | +0.18% | -0.83% | -5.34% | -8.67% | -6.66% |
| % Change year | +2.31% | -2.30% | +4.64% | +1.24% | -7.65% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 19.8948 | 27.3236 | 31.0435 | 33.7165 | 19.4893 |
| $ Change | -0.0128 | -0.0306 | -0.0764 | -0.1005 | -0.0668 |
| % Change day | -0.06% | -0.11% | -0.25% | -0.30% | -0.34% |
| % Change week | -0.06% | -0.11% | -0.25% | -0.30% | -0.34% |
| % Change month | -1.17% | -1.85% | -3.77% | -4.54% | -5.20% |
| % Change year | +1.76% | +1.61% | +1.00% | +0.71% | +0.48% |
