In the perpetual, everlasting saga of of the equity markets adaptation is a key trait that often gets glossed over by generic rules like "never average down," "cut your losses short," "you never go broke taking a profit."
The very simple saying of "adapt or die" is a much more fitting approach to investing than any list of so called rules that you see and hear on a daily basis.
Adaptation means that you don't sit out on a historic rally because you believe the market is being propped up by the Fed, being prone to collapse at a moments notice.
Adaptation is realizing that if it is true that the markets will collapse at a moments notice you will adapt to that scenario with equal efficiency as being long since April.
Adaptation is not trying to sound smart by dismantling TSLA's balance sheet, income statement and product quality when the stock was $300 per share and sticking to those same arguments as it breaches $2000.
Adaptation is not trying to flex your cerebral muscle by discussing useless economic statistics that are backwards looking and professorial in nature, at best.
Adaptation is making money in the markets, plain and simple.
When we last left off here on August 10th, I discussed our move to cash after putting together a double digit percentage gain to begin the month of August. The general stench emanating from in everything from software to FANGs at that time created some level of concern.
What has happened since then has not just been one or two brutal fumbles by the bears, but nearly a dozen. The bearish camp, especially into the middle of this week, had every factor possible leaning in their favor to take the markets down, however temporary. Instead they completely gave up their position to the bulls, with a close a record highs for both the Nasdaq and S&P to close the week.
Beginning Thursday in T11 and Zenolytics portfolios we began to systematically increase exposure. The increase in exposure for these portfolios will likely continue through the early part of the coming week.
Simply consider this single fact: The S&P has taken from June to late August in preparation for this move to new highs. A generally tight consolidation, as the S&P digested its gains. This week it very calmly moved to a new all-time high as if it was a routine action, without cause for much of any attention at all. These subtle hints of underlying market strength should not be overlooked. Nor should it be overlooked that we are now at new highs, with very little left in the way of resistance for both the S&P and Nasdaq.
Blue sky territory here we come.
The next couple of months may turn into a shock and awe campaign on the upside. Allocate accordingly.
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