The H.E.A.T. Formula
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The H.E.A.T. Formula is a radically different way to look at investing your portfolio.
H- Hedges, you should always have hedges and be agnostic as to being long or short. Bonds are not a hedge
E-Edges, you should always look for edges. Preferably these are edges with some sort of psychological underpinning, structural edges, or some sort of barrier to entry.
A-Asymmetric. Everything you do, be it trades or your overall portfolio, should be designed so that heads you win a lot, tails you lose a little.
T-Themes. You should always be invested in the top themes. Most everything else is just noise.
We will continue to build out our resources here to help. In the meantime we have a model Hedges and Edges ETF portfolio.
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Past two days is kind of what I have been looking for. Small drop in the markets, bigger drop in the stocks that have been the strongest. Looking at SPY...
Not seeing anything that tells me to jump into this market. CPI is this morning, so that could change.
The Morgan Stanley US Momentum basket dropped another 1.1% yesterday, bringing the two day drop to 6.6%. The Morgan Stanley US Value basket advanced 1.17%, for a two day gain of around 4%. At some point would assume you will see the financial media talking about a rotation into value. This happens from time to time, but never lasts. All that's going on is people taking profits in overbought names, which turns them into underbought names so you and I can buy them again :)
Quantum computing was in the news yesterday.....
Google Unveils New Quantum Computer With Mind-Boggling Speed-Bloomberg
You could have easily sold GOOGL when it dipped in mid November. I wanted to buy more when it bounced at the 200 day, I didn't, but I still believe this is a core holding. I do worry about search as once you discover AI you will never use Google for search again, but there are other things going on here.
Interesting divergence in a couple of the names I think of when I think quantum computing. IONQ was down.....
RGTI was up over 45%.....
Elsewhere, ORCL dropped 6.67% and overnight Taiwan Semi announced sales that were up 34% year over year, but down 12% quarter over quarter. Tonight we have Broadcom earnings. Have to think all of this is important as far as whether investors buy the dip now, or later. Keep an eye on the semi's....
We could either get a break of the 200 day and more downside, or an undercut and rally and a move back above the double top in the 260s. I think we see more weakness personally, but the benefit of a long short portfolio is it doesn't matter that much.
Barron's picking up on this theme, would have been nice to get an EUAD mention.....
NATO Is Taking Up Arms. These ETFs Stand to Gain.-Barron's
Argentina is still one of the best below the radar screen theme. Been taking a lot of profits along the way....
