Wall St. is driven by just two emotions: fear and greed. Pending on the degree to which you succumb to these emotions – it will have a profound impact on your bottom line. All too often, most investors will do two things: (i) buy when there is market greed; and (ii) sell when there is fear. It’s the opposite of what you should do. However, this is something you need to master if you are to be successful in the game of asset speculation.
Fed Reserve
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Powell’s Ready to Cut… And Not Just Once
Today Fed Chair Powell delivered precisely what the market wanted to hear… help is on the way. As a perpetual (closet) dove – Powell did his best to stay balanced however the cat is now out of the bag. Rate cuts are coming. And there will be more than one. Consistent with other meetings – Powell said rate cuts are an option if economic data continues on its current path. In other words, it was the (same) scripted “data dependent” Fed.
However, there were some important nuances.
Cycles: Your Advantage over the Average Investor
I made a decision to reduce my exposure to large-cap tech a few months ago. The decision wasn’t an easy one… these are great stocks. For example, did I sell prematurely? The answer will be more obvious in 6-12 months when the cycle has had sufficient time to play out. For now (as was the case when I sold) – I think the downside risks meaningfully outweighed further upside gains. In this post, I explained how selling is a way of managing your risk. I was ensuring I banked the appreciable gains realized over the past few years. In light of the rotation out large-cap tech we’ve seen this week – I thought it was opportune to share some thoughts on (a) how I calibrate my portfolio in a changing environment; and (b) when to be aggressive and when to play defense. It all comes back to understand the economic cycle…