My Market Forecast Calls For Wild Swings, Slight Progress: Hold VTI

Paul Franke profile picture
Paul Franke
19.24K Followers

Summary

  • I am upgrading my VTI Sell recommendation from last November into a Hold rating in June.
  • Enough bearish damage and sentiment exists for a bottom in the market, after a 20% to 30% decline.
  • A 20-year high for cash on the sidelines by fund managers is noteworthy.

silhouette form of bull and bear on technical financial graph

monsitj/iStock via Getty Images

I wrote a number of bearish articles about the U.S. equity market's rotten setup last year, with a suggestion to Sell the Vanguard Total Market ETF (NYSEARCA:VTI) in November here. My current

https://investor.vanguard.com/etf/profile/fees/vti

Vanguard Website - VTI Expenses

https://ycharts.com/indicators/reports/aaii_sentiment_survey

5-Year AAII Survey, YCharts

https://www.cnn.com/markets/fear-and-greed

CNN Fear and Greed Sentiment Index

https://www.cnn.com/markets/fear-and-greed

CNN Fear and Greed Sentiment Index

https://www.bloomberg.com/news/articles/2022-05-17/bofa-clients-hoard-cash-at-2001-high-as-stagflation-woes-surge

Bloomberg Article - May 17th, 2022

YCharts by SA

Author Reference Points, YCharts

YCharts by SA

Author Reference Points, YCharts

This article was written by

Paul Franke profile picture
19.24K Followers
Nationally ranked stock picker for 30 years. Victory Formation and Bottom Fishing Club quant-sort pioneer.....Paul Franke is a private investor and speculator with 36 years of trading experience. Mr. Franke was Editor and Publisher of the Maverick Investor® newsletter during the 1990s, widely quoted by CNBC®, Barron’s®, the Washington Post® and Investor’s Business Daily®. Paul was consistently ranked among top investment advisors nationally for stock market and commodity macro views by Timer Digest® during the 1990s. Mr. Franke was ranked #1 in the Motley Fool® CAPS stock picking contest during parts of 2008 and 2009, out of 60,000+ portfolios. Mr. Franke was Director of Research at Quantemonics Investing® from 2010-13, running several model portfolios on the Covestor.com mirror platform (including the least volatile, lowest beta, fully-invested equity portfolio on the site). As of January 2023, he was ranked in the Top 5% of bloggers by TipRanks® for stock picking performance on positions held one year. A contrarian stock picking style, along with daily algorithm analysis of fundamental and technical data have been developed into a system for finding stocks, named the “Victory Formation.” Supply/demand imbalances signaled by specific stock price and volume movements are a critical part of this formula for success. Mr. Franke suggests investors use 10% or 20% stop-loss levels on individual choices and a diversified approach of owning at least 50 well positioned favorites to achieve regular stock market outperformance. The short sale of securities in overvalued, weak momentum stocks as pair trades and hedges is also a part of the Victory Formation long/short portfolio design. "Bottom Fishing Club" articles focus on deep-value candidates or stocks experiencing a major reversal in technical momentum to the upside. "Volume Breakout Report" articles discuss positive trend changes backed by strong price and volume trading action.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This writing is for educational and informational purposes only. All opinions expressed herein are not investment recommendations, and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisor capacity and is not a registered investment advisor. The author recommends investors consult a qualified investment advisor before making any trade. Any projections, market outlooks or estimates herein are forward looking statements and are based upon certain assumptions and should not be construed to be indicative of actual events that will occur. This article is not an investment research report, but an opinion written at a point in time. The author's opinions expressed herein address only a small cross-section of data related to an investment in securities mentioned. Any analysis presented is based on incomplete information, and is limited in scope and accuracy. The information and data in this article are obtained from sources believed to be reliable, but their accuracy and completeness are not guaranteed. The author expressly disclaims all liability for errors and omissions in the service and for the use or interpretation by others of information contained herein. Any and all opinions, estimates, and conclusions are based on the author's best judgment at the time of publication, and are subject to change without notice. The author undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional materials. Past performance is no guarantee of future returns.

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