Embracing This Chaotic Market Calmly
We shared in our previous portfolio performance update that while the markets are chaotic, our results don’t have to be.
When it comes to investing, it's essential not to overreact to external factors. Some investors turn bearish due to macroeconomic challenges or geopolitical tensions, while others exit the market simply because a stock's price falls below its 200-day moving average. This often results in investors taking realized losses or getting whipsawed by short term noises. Instead, the key is to adjust your market exposure in a way that allows you to weather various situations and be reasonably well-prepared for anything that may occur.
This approach is akin to a soccer team having to both defend and attack throughout the course of the game. Most investors are only encouraged to be on the offensive and keep their money in the market at all times, often because the financial industry only profits from assets that are put to work.
In our Moneyball Newsletter back in late June, we highlighted that the US markets were showing signs of overheating, and we anticipated a possible retracement for the SPY ETF to fall to 415 levels. Accordingly, we adjusted our portfolio to account for such possibility although we were generally long on the markets till the end of the year.
Last night, the US markets experienced yet another challenging session, with both the SPY ETF and QQQ ETF declining by 1% and 2%, respectively. META initially dropped as much as 6%, though it recovered slightly somewhat by the end.
Our Moneyball Investing growth portfolio, which currently has very limited exposure to the tech sector, did not turn red and remained relatively unchanged at 0.01%. In fact, our overall position in META yielded profits from our options trades. Our performance also held up thanks to the slight recovery from some of the other stocks we recently purchased such as MacDonald’s Corporation, PepsiCo. Inc. and The Coca-Cola Company.
Always remember that when investing in the markets, the most important conversations revolve around portfolio positioning and risk management. It's about being well-prepared by skating to where the puck is going to be, rather than reacting hastily to near term macro factor or price fluctuations on the chart.
Lastly, here’s a quick sharing of the place we stayed in during our recent trip to Montigo Resorts, Nongsa. Loving the peaceful and calming vibes of the balcony view. ☺️
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