Just keep it simple and add some tech if you want. Large cap or small. You did not miss the boat here. It just got way oversold just like it was way overbought before.
Meta and TSLA are up bonkers this year but still 50% off their highs. From lower down the up percentages are higher, but the dollar amounts are lower, so from just the percentages they look like they are blowing off the top like 2020/21, but they are really just blowing up from their oversold bottoms. Keep this in mind.
Basic QQQ works and I hate Cathie and ARK but I recently added a couple percent of my portfolio in ARKK due to how oversold it was and I am a 51 year old fart. Risk adverse simply do SPY. Theres plenty of tech in there still even after the Index weight fundamentally changed from a higher tech Weight to lower last year. SPY also has more value which shouldn’t be forgotten with all the money flowing into tech so far this year.
I think tech should do well in the years ahead. But IMO I would not ditch value thinking the years ahead will be full risk on and all clear for QQQ and shitty ARKK to get to ATH’s like last 10 years. Remember if things slow guess which sector comes down hardest fastest. Same with the keep it simple plan on tech, pick a value sector like energy, pick a percentage in and stick with it, add on dips.
Most important point this year was and still is to get the low probability SaP 3200 in 2023 out of your head. Be honest - if we got there you would be too scared to buy anyway.
IMO I think inflation will get better but won’t go back to 2% target. I think it’s just tough talk. Inflation will continue lower and JP and folks will shrug and move on if we miss the 2%. Like even now not many folks care about inflation anymore. Getting used to it was the hard part. I also think interest rates will be higher in the future than they were the last 10 years. This will put more pressure on tech, especially smaller caps, in the years ahead compared to the last 10 years.
My saying would be “tech is wounded but oversold and was due for a lift, but value isn’t dead and will be more valuable to you in the future then it was last 10 years, don’t ditch it, and don’t fight the money coming in now from past higher inflation and current rising but close to topping interest rates.” Check out JXN which I recently added.
So after decades of “who cares?” we got a crash course on how inflation and suddenly higher interest rates hurt economies and markets on the shift, but now we need to learn how they add to the money supply after which will benefit equities in the years ahead. This is what I have been constantly going over since last year.
For example - The lower SS cola increases in 2020-22 were a tailwind because they lagged the rising inflation. This year is the reverse - Headwind flips to tailwind. I followed the Treasury payouts last month and saw the higher 2023 SS COLA’s adjustments added a total of $12 B more to the money supply then the 2022 January total SS payout. Even more then I expected. X 12 That’s $144 B, with a B, going to be added to the economy this year at last years “lagging” 8.7% inflation. - Tailwind!! The lower cola increases in 2020-22 were a headwind because they lagged the rising inflation. This year is the reverse - Headwind flips to tailwind this year. It’s like getting a raise and at the same time things are lower then last year including stocks - simple fundamentals no one looks at.
And SS COLA’s never go negative. They compound for the years ahead and this years 8.7% along with my predicted future elevated but not crazy inflation % will just compound the payouts nicely in the years ahead adding more to the money supply. The money supply outruns inflation like it pretty much always has the last 40 years. This is not the 1970’s folks. Sorry. With the higher COLA’s my Mom and Dad are stoked and going to Red Lobster a couple times more a month! Don’t short Red Lobster!
Look the economy and equities have worked fine in the past with higher interest rates and inflation. They were both so ridiculously low that last 15 ish years we forgot and that made “the headwind pivot” A lot more painful. We already had the reset now get used to the new normal of tailwinds from more and more money being added for folks to save, invest, spend and businesses to shoot for this year and I the years ahead. The money added is in the early innings.
I will put it bluntly - folks need to stop looking at how the headwind pivot of rising inflation and interest rates can hurt equities markets and economies and turn their focus on how rates and inflation once they top out and lower turn to tailwinds with huge amounts of money added to the money supply which will help equities that are oversold and a festering economy. 2022 was the painful pivot and 2023 is the money supply increase time.
Hope this helped.
Boerne, TX
Oakville, ON
Even with the doubters (and I was one of them). What's your YTD so far on these man?
