Past picks and looking forward

Today, I’d like to look at some of the calls I have made on this blog over the past year or so, and see where I was right, or wrong. I am a big believer in accountability in all aspects of life. As a lifelong athlete (bicycle racer for 40 years), I know that you must be accountable to yourself with your training regime, or you wont get the results. Same goes with investing.

So, how have my “past picks” from this blog done over the past year? And what’s next? Well, lets take a quick trip through time and see how I have fared.

Good calls

Bullish Energy: At ValueTrend, we began buying energy when everyone else hated it. I blogged on that as a contrarian opportunity when WTI traded near $40 in early October, here in November,  December, etc.  I targeted (and still do) $65, per the chart below. We were right…energy has popped..its $58 today. So far, so good.

Bullish value and metals: Way back in May and June of 2020, when the love affair was full boar on the tech sector, and nobody loved value or commodities – I wrote a strongly noted series of blogs encouraging people to move into value and reflation stocks. At ValueTrend, we went into these stocks fairly aggressively.  Here, here, here are examples of the blogs–although I wrote many more on the topic. I was right on this one as well. The chart below is the XME metals & mining ETF. I hope you were in on the trade.

Bearish FAANGs and “stay inside” stocks: In August of 2020, the FAANGs and stay inside stocks peaked. The FAANGs have largely traded sideways since (Google outperformed but the rest flatlined), and the inside stocks like Zoom and Peloton got spanked. I blogged on that peak with decent accuracy in early September here. I was correct on that call, albeit early, given that we began selling tech to buy reflation stocks in June and July – they peaked in late August (see my final comment). Below is the Amazon sideways pattern to date.

Neutral call

Staying calm during the storm: In the heat of the market crash, March 16th, I wrote a blog urging that investors do NOT panic. Markets would return to normal when we got a MACD signal, which looked close to happening. I quoted Jason Goepfert of Sentimentrader, who had a similar view: “Virtually everything we’ve looked at suggests a strong probability of gains over the next several months, even within the context of a potential bear market.” I was right about not panicking.

One thing I got wrong was the time it would take to see a recovery. My prognosis was based on historical bottoms after a crash. Typically, markets form complex consolidation patterns rather than reverse in a “V”. I wasn’t alone on that. I, along with many technical analysts, was/were wrong. For this reason, we bought back in slowly that spring, although history now tells us that it turned out to be one of the rare “V” reversals seen after market crashes. The chart below illustrates the 2009 crash and complex bottom, along with a diverging MACD signal.

Had my crystal ball worked, I would have gone “all in” rather than in stages. I’ll give myself kudos for urging investors not to sell, but a thumbs down for not recognizing the potential for a “V” bottom rather than a consolidation, given the sharpness of the selloff. Chart of the March 2020 crash below–note the complete lack of consolidation. Live and learn!

Bad calls

Bearish loonie: In January of 2020, I went on BNN and wrote a blog stating that I thought the tug of war between bullish and bearish factors for the CDN$ would keep it contained to about $0.77. I was wrong. The loonie went on to nearly hit $079. Its $0.7870 as I write this. So, have I learned anything here? Clearly not! I have simply moved my target for the loonie a bit higher. I am now more bullish on the loonie due to my bullish view on energy, but we still have a government who (for so many reasons) lags behind the USA & other countries in employment , vaccine distribution, fiscal responsibility, and economy . Click those links to learn the entire story. I still don’t think it will materially breach $0.80 vs. the USD. We shall see.

FAANG influence on markets: In July, I was becoming cautious on the tech stocks. I was early…they didn’t peak until August. As such, we sold our tech holdings early and underperformed for the middle part of the year. We made up for that in the latter half of the year when our value and commodity positions legitimized our stance. The one thing I got wrong was my view that the tech stocks and inside stocks would negatively impact the performance of the SPX. Their weight was so high in that index that it made sense that if they slowed, the market would slow. Clearly, the rotation out of those names and into other sectors allowed the index to continue higher. I got that call wrong. The SPX is at all time highs. Still, I don’t mind holding the sectors that have outperformed the index..metals, oil, value stocks. I was wrong about the index, but right about the outperformers.

Final thoughts

One of the reasons for posting this accountability blog, or to regularly post our performance numbers online at ValueTrend is to be accountable. Many Portfolio Management firms don’t post their results. We differ. We want to illustrate how we are meeting our objectives within the various managed accounts we run on behalf of our clients. Our goal is to succeed in meeting the objectives of each of our investment strategies within various market environments – not just when times are good. You can check our progress by following our Conservative strategy (ValueTrend Equity Platform), our Aggressive strategy (ValueTrend Aggressive Strategy) and our Income strategy (ValueTrend Income Platform) online.  Click on the performance tab on our homepage. Clearly, the aggressive strategy will have a greater risk/reward profile than the other two platforms. The income platform, being about 45% fixed income and cash, will be less volatile, but less rewarding due to its safety and liquidity objectives. The Equity Platform will typically provide a conservative level of growth that beats an income strategy yet manages risk far better than most traditional equity buy and hold strategies. As always, you are invited to contact us if you seek guidance in todays uncertain markets.