This is slightly different from my usual style of posts, but I just wanted to send out some brief thoughts on practically navigating the market we find ourselves in right now.
If it is your first time here, check out the post below on how to navigate the SixSigmaCapital Website and subscribe to the option that suits.
Many people are calling it a bubble, and whilst it likely is, that is just semantics. It is not actionable. What is more important is having a clear plan so that we may better navigate the weeks and months ahead.
I have set in place the following guidelines to navigate the weeks/months ahead, some of which you may find helpful:
Cash Position (min 10%)
Avoid Margin, Options and Leverage.
Maintaining portfolio exposure to several uncorrelated factors including different geographies
Selling into strength e.g. if a position is >100% above 200SMA will consider trimming. Conversely, defensive sell rules must also be in place for each position to minimise losses.
Maintain discipline by not fighting the trend.
Avoid the high-risk gamble of attempting to ‘short the top’ on stocks that are making all-time highs
Weekly reviews of my portfolio and the market to pick up on concerning features early. If enough concerning features, will reduce exposure more and with technical confirmation I may consider some high R/R shorts.
Holdings separated into core positions I plan to hold vs those that could be cut on short notice (The infographic below is an example only and does not reflect my current holdings.)
When volatility arrives, decision-making will be easier if you have pre-identified which names will be cut and at what levels. This prevents decision fatigue and negative actions, such as panic selling or letting winners turn into big losses.
Those are some brief thoughts on how I plan to manage the weeks ahead, and hopefully they were of some use. As always, this is not financial advice.
My current portfolio was most recently posted for subscribers a few days ago here:
Thank you for reading, ensure to subscribe to the plan that suits and see you for the next one!