Interim Market Update May 11, 2021`

[SOL]

Small updates will be posted here. So it would be a good idea to register for this forum.

What is happening is now is that the hot money is taking a beating, as indicated by this story. Cathie simply forgot the simple laws of investing. She over-invested in certain companies and is now paying the price for her transgressions. One notable company that she put too much money into is Tesla.

Cathie Wood’s miserable month looked set to continue on Tuesday, as her flagship exchange-traded fund slipped in pre-market trading and assets dropped below $20 billion to the lowest since January.

The Ark Innovation ETF (ticker ARKK) slid 4% as of 7:35 a.m. New York time. Caught in a broad tech selloff, the product has fallen for nine of the past 10 sessions, a decline that accelerated on Monday in the biggest slide in about seven weeks.

Tesla Inc., the fund’s biggest holding, was down 6.7% in the premarket. Roku Inc. and Teladoc Inc., also heavily weighted in the ETF, each dropped around 5%.

The stock rotation out of speculative tech names is proving tough for Wood and her firm, Ark Investment Management, with investors pulling more than $500 million from the main fund in May so far.

https://finance.yahoo.com/news/cathie-w ... 58549.html

We avoided TSLA because its business model is quite rotten so far. Everyone assumes that TSLA can fend off the big players like Volkwagon, BMW, Toyota, etc and each one of these companies makes a helluva lot more money than TSLA. TSLA will only make sense if it sheds a lot of weight. We would not consider it below 300 and would only show great interest in it if it dropped to the 198 to 240 ranges. Aggressive players could look at long term puts with at least 9 months of time on them.

The main thing to focus on is the April Job's report, It indicates that the Fed is going to continue pumping money into this economy. So any correction no matter how strong it is will be short-lived, for the Fed understands that all these economic signs of strength are nothing but a charade. Take away the hot money and the economy and the markets crumble. So they will continue to replenish the punch bowl.

It is possible that the Dow sheds from 9 to 11 per cent from its highs and if it does it should be viewed as a lovely opportunity.

The sentiment is most likely going to take a hit, the faster bullish sentiment drops below 39 the better the long term gains will be. Or neutral sentiment should surge to the 45 ranges
An update will be sent out roughly within 48 hours.

[scremonini]

Hi Sol and other fellow investors,
considering the circumstances and the stance of the FED to pump the market, are you still confident that the USD is bottoming out in the high 80 figures of the USD basket index?
I am personally overexposes in USD with holdings in US stocks, long FX positions against major pairs, Call options on the UUP etf and cash in USD.
I hope it turns around sooner rather then later because it's always hard to bleed out, however I am adding more wood to the fire if it keeps dropping, looking at the long term picture. However, is the long term picture still looking bright for the USD?
Greetings from Switzerland.
Thanks
Seb

[Centeron631]

so Sol now that u bring up ARK i have got caught in downturn of Ark funds K G and W. if i sell today after being up maybe 28% overall i will lose over all $400. Should i dump and revinvest in TI or hold for some rebound the level of which is anyone's guess. I do note i have lost in about one week 9.3 % on pij and 12.42% on xent. thks

[bpcw]

so Sol now that u bring up ARK i have got caught in downturn of Ark funds K G and W. if i sell today after being up maybe 28% overall i will lose over all $400. Should i dump and revinvest in TI or hold for some rebound the level of which is anyone's guess. I do note i have lost in about one week 9.3 % on pij and 12.42% on xent. thks

My personal opinion is that you should sell ARK and reinvest in TI stocks that are in a much better position to sore on the next market upswing. You could sell parts of the etf as and when you can get into a lot of a TI stock. If ARK rebounds then the TI stocks should rebound more or at least that's the theory. As far as the stocks you mention, you haven't lost anything unless you sell, we have to get used to volatility so sit tight, it's all happened a million times before! Remember the trend is your friend, just buy up TI stock lots as they come to the suggested buy prices and sit tight, breath and relax knowing sooner or later the markets will rebound.

[SOL]

so Sol now that u bring up ARK i have got caught in downturn of Ark funds K G and W. if i sell today after being up maybe 28% overall i will lose over all $400. Should i dump and revinvest in TI or hold for some rebound the level of which is anyone's guess. I do note i have lost in about one week 9.3 % on pij and 12.42% on xent. thks

If you decide to invest in TI recommendations, the same principle of investing equal amounts in each stock will apply. Cathie's mistake was to take massive bites and when the stock is going up, it can be fantastic but things always turn around and one never knows what tomorrow holds. This is why its prudent to deploy equal amounts so that if things don't work out as planned you won't get blown up

Having said that the final decision of whether you should be in ARK funds is something you have to decide.

All i can say is the current selling is leading up to an opportunity and it's always a good thing when the markets let out some steam after a strong run-up.

[SOL]

Hi Sol and other fellow investors,
considering the circumstances and the stance of the FED to pump the market, are you still confident that the USD is bottoming out in the high 80 figures of the USD basket index?
I am personally overexposes in USD with holdings in US stocks, long FX positions against major pairs, Call options on the UUP etf and cash in USD.
I hope it turns around sooner rather then later because it's always hard to bleed out, however I am adding more wood to the fire if it keeps dropping, looking at the long term picture. However, is the long term picture still looking bright for the USD?
Greetings from Switzerland.
Thanks
Seb

One thing everyone should always remember is that one should never, ever over-invest in any single play, regardless of whether it is a currency, commodity, stock, etc. There is no guaranty that everything will work out as planned. Things could go sour. Having said that Europe is still in a mess, Asia's is still reeling and despite all the noise that is made about cryptos, the USD is still the strongest game in town, because it is the reserve currency of the world, dominates the World in the AI Arena and has the worlds most powerful army. Those that don't listen can be forced to listen.

On the long term monthly charts, the MACD's have still not experienced a bullish crossover, though they are trading in the extremely oversold ranges. When they do, we suspect that the dollar should experience a strong move. So look at the current pullback as a move by the big players to shake the weak hands.

[Centeron631]

"Cathie simply forgot the simple laws of investing. She over-invested in certain companies and is now paying the price for her transgressions".

Sol this may be a little out of context to interim MU for which i apologize for, but this unbalance that keeps nagging at me seems to fit in with your Cathie Woods comment.
When i started investing TI sometime in Summer or late spring of 2020 i started off committing $2000 for each level of the monthly reports buys that i was able to execute on into my margin portf with broker A but as i gained more confidence i have gradually increased to somewhere between 3500 to 4000 each buy (also trying to factor in there will probably be less level 2 buys and even more so less level 1 buys. Now i have injected TI into 2 portfolios with online Broker B one portf with a margin account in the vicinity of 6000 and the Registered Retirement Portfolio about 8000 per buy. IS this a severe error and do i have to somehow level all of these out? If ur answer is yes is this a good or bad time to do it during so much market volatility? Actually i do not invest on margin but like to have it there available if something comes up and i do not have temporarily enough usd and need to convert some cad. thks u again for ur patience.

[SOL]

I will cover this in more detail here on in the next update. I will say this and let others chime in. Margin investing can be okay with big emphasis on Can if you are able to cover the position if SHTF. In general when we are tempted to go for margin and we are tempted but we step back and review the situation when the emotion runs it's course. When that is done, we generally opt for options if the urge is still there. At least with Options your downside is limited, granted you could lose it all, but we tend to focus on very long term leaps when the main move is underway. main move being that our technical indicators are no longer the oversold ranges.

We will also cover when its the best time to use margin during the investment cycle, again we don't recommend margin trading but there are times when the risk to reward ratio moves in one's favour.

Selling when markets are selling of is generally not the best time for one close positions out unless they are in the green and one needs money.

The most important thing to remember is that we get into plays because we plan to hold onto them until the stock is trading in the extremely overbought ranges. As it stands we don't have many plays that are in the overbought ranges and those that are showing substantial gains from their entry price.

The questions you pose are very hard to answer for each person has a different perspective and it is hard to tell one what to do unless one has walked in their shoes for a considerable amount of time.

Having said that, we were expecting this volatility. One cannot expect markets to trend upwards without some pullback especially when so much money is being pumped into the economy. If the markets don't let out some steam along the way up, then a spectacular crash is usually in the works. So from a long term perspective the market taking a breather right now is a positive development.

[bpcw]

"Cathie simply forgot the simple laws of investing. She over-invested in certain companies and is now paying the price for her transgressions".

Sol this may be a little out of context to interim MU for which i apologize for, but this unbalance that keeps nagging at me seems to fit in with your Cathie Woods comment.
When i started investing TI sometime in Summer or late spring of 2020 i started off committing $2000 for each level of the monthly reports buys that i was able to execute on into my margin portf with broker A but as i gained more confidence i have gradually increased to somewhere between 3500 to 4000 each buy (also trying to factor in there will probably be less level 2 buys and even more so less level 1 buys. Now i have injected TI into 2 portfolios with online Broker B one portf with a margin account in the vicinity of 6000 and the Registered Retirement Portfolio about 8000 per buy. IS this a severe error and do i have to somehow level all of these out? If ur answer is yes is this a good or bad time to do it during so much market volatility? Actually i do not invest on margin but like to have it there available if something comes up and i do not have temporarily enough usd and need to convert some cad. thks u again for ur patience.

Probably best to give percentages rather than amounts, for example 5k per lot is far too much if your portfolio is 20k, if it's 10 million then it's being overly cautious. This will give us a better gauge of your dealings!

[AstuteShift]

Personally I don’t do margin trading

Options, leap plays and spreads more than enough leverage

[Yodean]

We will also cover when its the best time to use margin during the investment cycle, again we don't recommend margin trading but there are times . . .

I am looking forward to your thoughts on this.

Thus far, I've stayed away from using margin as I have known quite a few individuals pretty much destroyed by using leverage, especially circa 2008/9 . . . Shakespeare's "neither a borrower nor lender be" was what I got out of those transitive experiences.

Potentially almost as devastating as a messy divorce if one has significant assets.

Especially when combining options/futures with margin/leverage -----> Game of Thrones: "You win or you die, there is no middle ground."

Still, I am a middle-aged dog wondering if I may learn some new tricks . . .

[bpcw]

Well according to https://www.aaii.com/sentimentsurvey bullish sentiment has dropped to 36.5% and neutral to 36.5%, just a little drop in the overall markets and all the nervous Nelly's go running for the hills!!!

I smell opportunity!

[Investor87]

Sol,
In the latest MU 5/13 you said,
"the May correction might not materialize. Instead, the stock market correction could be delayed until June or July. However, unless the trend changes, we will be embracing all pullbacks with gusto. Market Update, April 30, 2021
We were wrong on the time frame."

You said you were wrong about the timeframe. Do you think the "June or July" correction could be in May or are you saying that it could be later? It didn't seem clear.

Just curious. I still have cash from selling a bunch of stocks in Jan/Feb and am patiently waiting for the right moment.

[SOL]

The June-July correction could be taking place now. However, for a market to enter the correction mode, it should have shed at least 6% from its highs. Until then it's just letting out steam in stages.

[Centeron631]

I regret now i even mentioned the word "margin" as it has nothing to do with what i wanted to discuss. i only use margin for a day or 2 while waiting for some $ to be transferred from another bank account to broker or for settlment sale funds when ive decided to buy a stock immediately. The original question remains do i need to equalize long term accross the Board in the amounts at the "level" investing level towards standarization in the 3 accounts to prevent a smaller version of what Cathy did.

thks