As regular readers know, since mid-summer we’ve been POUNDING THE TABLE saying that stock markets were too focused on overpriced, overbought technology and “stay at home” names like Amazon, Zoom, Peloton, Facebook, etc. It took patience to avoid buying these overdone names. But we held our ground.
Instead of buying hype, ValueTrend bought value stocks. We bought dividend payers trading at good multiples. We bought stocks that will benefit from inflation, and stocks that would benefit when the “normal” economy re-opens.
Its paid off.
In September and October, and November so far, the ValueTrend Platforms outperformed broad market indices. We’ve been vindicated as money rotated from growth to value. We still feel value stocks are the place to be.
But in the near-term, we should consider the potential for the value names to pull back a bit. Some of the value stocks we bought just a week or two ago have had massive rallies this week. A good problem. We chose to sell a few of these stocks today. We anticipated certain price targets to be reached within a number of months. Instead, we reached them in a week or two. This is not the type of move that lasts without a pullback, normally. We materialized that upside by selling a few of these fast movers. We now anticipate buying many of the names back, along with new names upon a near term correction. We remain focused on value stocks. Any neartermed pullback should provide investors with new entry points.
Below is the value index chart. Note the gap up, and the overbought neartermed momentum signals (RSI, stochastics) on the first two indicators below the daily chart. Sometimes gaps are filled, implying a pullback in the near-term.
The weekly chart (not shown) is not overbought. So any pullback will likely be very shallow and short. Take advantage of it.
The next level in Wealth Management
If you, or your friends and family are not benefiting from the current shift in the markets, do yourself a favor. Contact us. We’ll explain how we can manage your money as prudently and conservatively as we do ValueTrend clients. ValueTrend tends to appeal to conservative investors with household investments of $500k + registered, non registered, TFSA, RESP, corporate accounts combined.
Also…Feel free to send the link to this blog to your friends and family. The more readers of this blog, the more ideas we can share together. On that note- please post your comments below!