Update 2-2-23

 

The market has been on an incredible run lately. Growth stocks are on fire and we may have seen multiple short-squeezes today (including UPST). Here is the Model Portfolio's performance since its inception on 11-29-22 against two benchmarks.

Model Portfolio:    11.0%

SPY:                        5.2%

QQQ:                      10.0%

Growth stocks, which make up a majority of the portfolio, tend to move in extremes. When the market is up, they rise fast. When the market is down, they drop lower than blue-chip and value stocks. Growth investing comes with a lot of volatility, and if one cannot handle the dramatic ups and down, then growth stock investing might be right for that person. While the Model Portfolio is up significantly, that can change fast -- which leads me to the next topic.

There was a trifecta of earnings misses today from big tech: GOOGL, AMZN, and AAPL. What are we to make of this? It seems to me the earnings reports show that companies and their customers are spending less. The earnings results send the message of slower economic growth and a deceleration in earnings. The market is forward-looking and those results don't inspire confidence in investors. It is no surprise, then, that market futures are down significantly after-hours.

What we could see is a broad sell-off, particularly in tech and growth-stocks. I expect tomorrow to be red, if not deep red. But I have no plans to sell any stocks in the Model Portfolio. The intention of the portfolio is to be a long-term investment portfolio. As such, it is not designed to take short-term profits or react when the market makes strong moves. Unless part of the thesis of a company has deteriorated, I do not plan on selling. That could change though depending on market conditions. There is something to be said for hedging bets, but that's not a strategy I generally want to take. Wealth is built my holding great companies long-term, not by selling at the first sight of danger.

One of the reasons I did not buy more MA, CB, or WM, is I wanted to see if there was a pullback. Those stocks were extended when I bought them, and I did not want to lump-sum at the top. If the stocks in the Model Portfolio pull back, I may start adding again.

A note on TA. I wanted to add MRK to the portfolio, but based on the chart, it seemed topped to me and I decided to wait. That thesis is playing out, as MRK continues to drop.

I thought the same might be true of CB, but I chose to add shares anyway. I don't ever want to try and time the market perfectly -- it simply cannot be done. Anyone who tells you otherwise, I would not invest money with them.

Tomorrow will provide some information on where the market might go next. We also have the jobs report and we'll see how the market responds to that.

That's all for now.

This website is created and authored by Marlin Sandlin and is published and provided for informational and entertainment purposes only and merely cites my own personal opinions.  I am not a financial advisor, and this website is not intended to constitute investment advice or provide specific advice or recommendations for any individual or on any specific security or investment product.  Any action you take upon the information you find on this website is strictly at your own risk.  This website may share links to articles and information which is interesting to me, but it is in no way an endorsement by me or by anyone associated with me.  The views reflected in the commentary are subject to change at any time without notice.   I may or may not hold investments in the companies or securities discussed on this website.

Marlin Sandlin owns shares of Upstart Holdings, Inc. (UPST), Alphabet, Inc. (GOOGL), Aaple Inc. (AAPL), Mastercard Incorporated (MA), Chubb Limited (CB), and Waste Management, Inc. (WM).