"FAQ" stands for "frequently asked questions." As a professional money manager, I have a lot of questions that are frequently asked of me, but I like to give a personalized answer, rather than having a "FAQ" tab on my website.
I almost never check out a "FAQ" section of a website. What am I, chopped liver? What if I want to word my question a little bit differently from the "frequently asking question people"? Will I get a different "frequent answer"?
Having said this, here are some frequent thoughts running through investors' minds right now:
1-Bill, aren't you worried that this bull market is getting long in the tooth?
2-Bill, are you afraid that we are entering into a bubble in the stock market?
3-Bill, what are your plans if this market starts rolling over and the bear starts to come out of hibernation?
4-Bill, aren't you afraid that another "2008" is lurking right behind the next uptrend in the market?
5-Bill, do you like dry Texas style BBQ or wet Kansas City BBQ? Not really, I just made that one up!
But I do like my brisket "Texas style" (Dry) Sorry all you Missourians and vegetarians.
I don't have a frequently thought of questions tab on my website. "FTOQ's," but I know that a lot of you are thinking the same thing. So, let me answer your questions with my analysis and conclusions.
The three-year chart of the Dow below clearly shows a market that continues to hit new highs. In fact, we hit a new ALL-TIME high on the Dow this past week and the PE ratio is not bubble like. To sell everything next week would be making a "guess" that this is currently the "top" of the market.
You could have made the same guess at 10,000, 11,000, 12,000, 13,000, etc., and you would have guessed wrong.
Calling a top in a stock, sector, or market is as hard as guessing at a bottom. Has Apple (AAPL) hit bottom yet? No one knows.
I have heard that it has all the way down from $705 to its current $430 level. Those that tried to guess at the bottom have been wrong all the way down. I bought Apple at $368, sold it at $637 and have been calling it "dead money" ever since.
I did it in an article for Marketwatch.com. I also stuck my neck out on CNBC with the same opinion. My opinion still has not changed on the stock. Apple is still dead money. Apple will eventually do a Netflix (NFLX), however:
That is, it will find a bottom, goes sideways for a good while, shake out angry investors, and eventually break out and start a new uptrend.
I don't think that Apple will explode to the upside like Netflix did, but I do believe that it will not go down forever. The downtrend will eventually reverse, the sideways trend will take place, and the uptrend will eventually ensue.
Just as Apple will eventually do a Netflix, the market will eventually do an Apple. Good stocks like Apple do not go down forever and markets do not go up forever!
Just as Apple rolled over, so will the market. The problem is nobody knows when.
So does that mean we sell everything when the market starts to roll over?
Not necessarily. It is best to manage your portfolio one stock at a time. I look at my individual stocks on a daily basis and make many small decisions each day, rather than one big emotional decision.
When the market does inevitably begin to roll over, the asset classes will start to rotate. Leaders will drop and laggards will begin to rise. "Risk-on" assets and sectors will start to give way to "Risk-off" assets and sectors.
Let's see if there is any sign of that occurring as we sit here today. Here is this week's update of the how the asset class rankings stack up:
Top Ranked Last Week
Top Ranked This Week
Data from Best Stocks Now App
I see almost no change from last week. "Risk-on" is still the play. This cycle has been in place for almost one year now. It will change eventually, however. It will be at that time that changes need to start being made. Here are the WORST asset classes now:
Bottom Ranked Last Week
Bottom Ranked This Week
Once again, there is no change from last week. Being short the market continues to be THE WORST place to be invested. Gold, silver, cash, commodities and emerging markets are not good. At some point in the future, the first will be last and the last will be first, but for now the trend that has been in place for a long, long time remains in place.
Here are the current leading sectors in the market.
Again, very little change from last week. If anything, the leaders have only gotten stronger! These leaders have been in place for a long time! Here are the lagging sectors:
Still, very little change from last week. I will continue to monitor things on a daily basis. I am having a hard time finding stocks that are just beginning to emerge, many are extended, but I saw several that turned my head this past week.
In conclusion, I see no reason to run for the sidelines at the current time. I also see no reason to drop my guard. In fact, this current market move could turn parabolic before it is all over.
I see no reason not to keep the green flag flying for now! I have been long the market for almost four years now!