The markets had a great week seeing the first five-day positive run since 2006. However, we could be standing on the edge of a cliff that will see us retrace the market’s recent lows. Between this sudden bounce and the possibility of negative news on the horizon, Get Irked recommends that investors use this upward move to lighten up on positions they would prefer to not hold for the long-term. I’m not entering any new positions until we hear about an agreement between the U.S. and China on the Trade War and see what the Federal Reserve does with their balance sheet and interest rate hikes in 2019.  

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Market News

 

• Earlier in the week, Fed Chief Jerome Powell reiterated that the Federal Reserve will remain data-dependent and only raise interest rates when the data suggests they should. The market exploded with exuberance. Later in the week, both Powell and other Fed chairpersons said they didn’t see signs the economy was all that weak (ignoring guidance cuts from pretty much every company reporting earnings). The Fed’s wishy-washy attitude may have seriously questionable effects on the market in coming months.
 
• The market is optimistic (almost overly so) about trade talks between the U.S. and China. This positivity is causing the markets to shoot up in value. Although an agreement between U.S. and China would certainly be a good thing, we feel that the likelihood of any significant progress any time truly soon is slim. If an agreement isn’t reached, we could see some serious downside (possibly even retesting the recent lows) as it seems as though the market’s already pricing in the good news.

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Get Irked Updates

 

• Last weekend, I revealed my Speculative Portfolio – extremely high-risk, high-volatility positions that should not be held for the long-term. So far, it’s performed incredibly well, bringing me back to even from being down 15% just a few weeks ago on Christmas Eve!
 
• A member was concerned about retiring in 2019 and whether she should be worried about her investments. We gave our perspective about retiring in 2019 and how to prepare.
 
• I revisited a stock suggestion made by one of our members back in August. Although we weren’t positive on the play, it’s turned out to be huge – returning nearly 50% in just five months! If there’s one thing I’ve learned from the decades I’ve been investing, it’s that I need to be prepared to be wrong… a lot.
 
• I did some year-end analysis comparing the performance of my self-managed and roboadviser portfolios to the performance of the S&P 500. In 2018, the S&P dropped 6.59%. My Value Portfolio dropped just 3.18%, less than half of the S&P’s drop, and my Growth Portfolio actually gained 1.55%. Don’t believe advisers who tell you that individuals can’t outperform the market. You can do it.

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Trades in Play

 

• This week’s upward movement saw me take profits and reduce position sizes in my long-term portfolios in order to prepare for a potential retesting of the recent lows. My speculative portfolio, on the other hand, was a wild one. Stay tuned to our Facebook group for more details later this weekend!