WHAT MAKES ME strong in my convictions is that I’m always ready to abandon them. As a trader, I have no allegiance to one stock, sector, analyst, idea or asset class. My only loyalty is to the bottom line.
And while we are influenced by the past, we live and trade in the present. TV’s talking heads have an explanation for everything, but the truth is there are no rules for how the market “should” act.
So in positioning my portfolio, I start by erasing any preconceived notions about how a trade might turn out. It’s a technique that entails keeping not only your eyes open, but your mind as well. In short, assume nothing. When everybody knows something is so, it usually ain’t.
One of the things everybody knows is so: When the Federal Reserve cuts interest rates, the stock market rises. But after six rate cuts and seven months, the big caps are still underwater year-to-date. Fighting the Fed hasn’t exactly been that bad a strategy lately. (more…)