Date: March 13, 2024

Be a Smart Investor – Don’t Hold On For Dear Life

You have to give credit where it’s due. The bulls have been relentless for almost 18 months, but certainly over the past 5 months. It’s  been incredibly impressive and a pleasure to enjoy. These kinds of runs are semi-generational. When I look at our strategy lineup, I don’t recall anything as strong as this nor as widespread in my 35 year career. Granted, it’s not apples to apples because we have 18 strategies today and I started with one single strategy.

My conversations with clients versus other people have been divergent lately. It is interesting that clients welcome pruning and planting, reducing exposure and adding to lower volatility instruments. Other folks have mostly been about trying to make up for lost time by pressing the envelope with fresh cash and other very low risk assets. I do applaud investors who review, analyze and assess their portfolios and seek change after 3-5 years of not delivering on expectations. But, to take cash, money market and short-term bond money and throw it without caution into aggressive vehicles doesn’t resonate with me. I would much prefer to miss the rest of a move and then come back when the odds are more in my favor, but that’s just me.

The other day we bought more Tesla, REITs and Pfizer. Tesla is short-term trade like we did earlier this year. We will either be right or wrong this month. REITs have been beaten down and began to outperform so we added a third piece. Pfizer has been decimated. Our income strategy has owned it and now our Unloved Gems just bought it. Recall that we did the exact same thing with Bristol Myers.

See charts of those two drug stocks  below.

Yes, I know. They are not pretty when looking out beyond a few months. However, they look to be transitioning from bearish to neutral to bullish. And I do love the risk/reward. I know. I know. Neither one is Nvidia nor associated with AI. We have been pruning those positions. And I sure someone will let me know that I have not idea what I am doing and I am wrong. Fair enough.

I am finding there is plenty to buy and my watch list grows almost everyday. My problem is that the portfolio is pushing against its maximum allowed stocks and I am having trouble finding things I want to sell. All good problems to have and epitomizes a strong bull market.

I still think the stock market is in the process of peaking with a pullback coming over the coming few months and a low by Memorial Day.

On Monday we bought more levered NDX and RYDHX. On Tuesday we bought more TSLA, more FREL and more PFE. We sold SSO.


Paul Schatz, President, Heritage Capital