Up, Up and UP. This week our “Traffic light“ turned GREEN again, finally. Even though we have election anxiety and corona virus worries. The stock markets do not seem to care or, as we think, they are looking forward to a quick recovery. Because most stock indices and exchanges are in the green and keep going up, up and up. There are some negative days but on average we have gained 3 points in our “Traffic light“ system this week. The “Traffic light“ is now at 83, meaning 83% Stock and 17% Cash to hold. Because of that we had to add about 2% more shares to our portfolio positions (See the My Holdings section on the ETF page for more details).
And now the best news: For the first time all our positions are profitable. We do not have any red numbers in our portfolio. Since we started this ETF in mid June the profit on our stock is 31,33%. On our total value it is about 20% because we had to protect some wealth when the markets went down (see the strategy – step 4). To be exact: “The Return On Investment is 19,91%” in 4 months.Let’s see what the rest of the year brings us.
We have devised our traffic light method to exclude all emotion. We have to adapt our ETF portfolio to the signals that the traffic light sends out. These signals results in a figure/percentage for our traffic light and because of that percentage we have to buy or sell some shares from our watchlist elsewhere on this website. To see the exact figures, outcome and effect you can click on the links below.
Our Cash / Stock Ratio: the-wiseguy.com / The Traffic Light
Our Latest Fund Changes: the-wiseguy.com / TWISE ETF
Our List Of Wiseguys: the-wiseguy.com / The List
- Update October 4th 2020:
– Mark our time… There will be buying oportunities ahead but not now. The “Traffic light“ remained at 80% Stock and 20% Cash. We believe that patience is an investors strongest weapon so we will mark time. The next few weeks will be exciting we have the US elections coming up and there are more Covid-19 worries. After that there might be a relief rally. We expect the stockmarkets to react fairly heavy with strong ups and downs but the general direction will be downwards. So we just have to wait it out and strike at the right time. We will need money for that so that is why we wait.
- Update September 27nd: –
Lets start with some bad news. We had to sell Repro Med Systems Inc (Ticker: KRMD) with a 29% loss. Our believe is that the stock we pick all rise with a minimum of 30% a year for at least 5 years and they have to keep rising with that same speed. But when a stock losses 25% from the high we believe something is wrong. Most of the times we do not know the reason but something is up. Why should a stock fall 25% all of a sudden? Is there fraude? Has something changed in the indusrty? Do they not have the growth we expected? Or is it the whole sector? Anyway something is wrong and to protect ourself from future losses we have to sell when a stock is down more than 25%. That is the rule. Sometimes they rebound but most of the times we were right in the end.
And now the good news: The stockmarkets do not represent the value of the companies today but they are an expectation of what the value will be on a later date (6 to 12 months usually). That is especially clear this week. Altough everybody is afraid of a second wave of CoVid19 victims the markets do not react to that news at all. Instead they are slowly going higher.
Most indices are unchanged or a little up from last week. Interest rates and the VIX is going down. That means our “Traffic light“ goes up and with 3 points this week. We are almost in the green zone, only one point left to go. It is at 80% Stock and 20% Cash. So we bought some more stock. We have increased our positions with about 7%. That does not 1 in 1 correspond with 3 points but we also have to make up for the cash we got from selling KRMD.
Update September 20th:
– We are finally almost back to where we belong. Almost in the green zone. The “Traffic light“ is at 77 (That means 77% Stock and 23% Cash). So we have to buy some more stock. We have selected Servicenow (NOW) and MSCI Inc. (MSCI) from our ***list of wiseguys. We have to buy 13% of our total value to match the 77% stock. Last week it was 64% and now 77%. (77-64=13). And 13% of 1,400,000 is $ 182.000.00) That’s a nice amount to be buying stock for!
This week special attention goes out to Repro-Med Systems, Inc. (KRMD) because they are apporaching the -25% loss marker and than we have to sell them. Let’s hope it will not be necesarry. That would be the second time we have to sell a Wiseguy (the first stock we had to sell for that reason was Ehealth – EHTH back in July).
Update September 14th 2020:
– “Traffic light“ changed to 64% Stock and 36% Cash. Although we did not agree on this one. I wanted to stay cautious but Bill-Bull is (as his names says) much more bullish. Luckily that is why we have the Traffic Light. Most indices are up and therefor our traffic light is also up. Slowly we are getting back on the buy-side. “Traffic light“ changed to 64% Stock and 36% Cash. We wanted to add ITM Power (ITMPF) from our List of Wiseguys. Starting with an 8% position to match the traffic light. I hope we are not to soon and wish for the best. “Anyway…..It’s one of the wiseguys…..What can possibly go wrong? “
Update September 6th: – “Traffic light“ changed to 58% Stock and 42% Cash. adjusted our positions accordingly.
Update August 30th: After the negative week of last week. This week the indices moved up just a tiny little bit. The S&P500 is up 0.4%, The VIX moved 0.08% only the Nasdaq gained more than 2%. Mainly driven by the jump in FANTANG stock(split) news. Other than that it was a really slow week which is confirmed by our “Traffic light“ because it is stuck at 60% stock (and 40% cash). Maybe we need a pause for reflection. That is why we have the “Traffic light“. Sometimes it is better to just wait and see what will happen than to rush in because of FOMO*. The-Wiseguy once said: “Sometimes patience is a stocktraders most effective weapon” ….. Ooooh and fomo means fear of missing out 😉 …..
Update August 23rd: We had to sell about 8% of all our stock positions because the general macro economic situation is starting to get overheated. The major indices are telling us that we have to keep 40% of our value in cash. We are getting close to 50%. This has only happened once before, right before the corona crisis. We are not there yet bur getting close. Be aware. The “Traffic light“ changed to 40% Cash and 60% Stock and we adjusted our ETF accordingly.
Update August 16th:
A flight to safety??? The “Traffic light“ changed to 36% Cash and 64% Stock. Berkshire hathaway sold Goldman Sachs (and the majority of the other banks they hold) and bought Barrick Gold. Gold? Rule number 237: With fear in the markets people sell their stock and flee to gold. That means something is up. Mr. Buffet has to protect his assets and moves to what he thinks is safe. We saw this starting about four weeks ago. And we keep selling more stock. We sold about 5% of all our positions and increased our cash position.
Update August 9th 2020
– We sold 1 to 2 % of all our positions. Because the traffic light changed to 30% Cash (and thus 70% stock). Our stock value went up about 5% this week. Bringing the total to 23,5%. So we decreased al of our positions (about $70,000.00) because there is more fear in the markets, our traffic light has changed from 74% stock to 70% stock (and therefore cash changed from 26% to 30%). Stock markets are preparing for a second wave of corona infections and this way we can protect our assets.
-Update August 2nd 2020 –
We sold 50% of our least profitable position. Argenx (ARGX.BR) was at -4.5% in our ETF. We had to do that because the traffic light changed to 26% Cash but our stock value went up about 6% this week. So we decreased some of our worst position (about $50,000.00). And because there is more fear in the markets, our traffic light has changed from 70% stock to 74% stock (and therefore cash changed from 30% to 26%). Stock markets are preparingfor a second wave of corona infections and this way we can benefit from it. We think it might be a good time to buy now. The change is still small because we want to keep some cash in hand for when most shares will go down even more.
Update July 24th 2020:
There is a bit more unpredictability now that the results for Q2 and also the past six months will be published. These changes can be seen in all the major indexes but also the GCC Index has gone down and especially in the Vix (fear index). All these figures combined are our traffic light (as you can see on its own page on this website).
Update July 16th 2020:
It is expected that the vast majority of companies performed considerably worse than in the first six months of 2019. Also we have some new corona virus trouble lurking around the corner. So the general consensus is negative. But of course there are always positive exceptions such as Zoom video and Hellofresh. Unfortunatly one swallow does not make a summer.
the-wiseguy.com / The Traffic Light