We've been discussing the past few weeks how this correction has missed "The Generals" (the leadership stocks). While the market went through a horrid January, many of our stocks were unscathed. Which had me worrying - it's hard to get behind a shorter-term bottom until the Generals are taken out back to the barn, blindfolded, given a cigarette, and then shot.
In a bull market, I want to be buying stocks that are holding up during a downturn because there is no pattern that they indeed need to be shot. In a bear market, I take the opposite tack - I assume they are going to be shot. So this is why we have not built up any 3-4-5-6% type of stakes the past month in stocks that had "held up the best". Indeed, I've had one measly position over 2% on the long side. (which is being sand blasted of course).
I am listing below names I consider either the market's leaders of the past 6 months (large cap) or our personal leaders (small & mid cap). You can see them in various stages of true or potential duress while the traders run into dry bulk shippers and homebuilders. Very reminiscent of what we saw many times in 2008; a "rotational" correction where sector after sector took their turn getting hit.
Eventually I would like to make many of these major positions (4%+), but I'd prefer to see them take multiple bullets first; as they fall, we'll begin throwing in layers of positions realizing we won't catch the bottom. These are among the best fundamentals and with charts that held up the best through the carnage of late, but I'd expect some/many to take some hits on the next leg down.
That said, this market just seems on hold until Friday's labor report. Hint to market: it is going to be bad; why are we waiting around as if some magic number will change the economy? And then when we are done with Friday we have to wait until the magic bailouts that will be announced next week from D.C. Hint to market - we are on "savior announcement" number 47. The first 47 failed. Are we really going to play this song and dance on #48, 49, and 50? Getting very old.
And then maybe someday in the future we can get back to a normal market.
Taking the first bullet(s):
Being walked to the barn?