Thoughts on Today’s Selloff (4/10/14)

I got a few emails recently asking me why I haven’t updated my blog and what are my thoughts on the market.

1) My last few blog posts were titled: “Running Low On New Ideas,” “Caution Warranted,” “Two Market Scenarios From Here” (both involved a correction), and 3 videos discussing how many leaders were breaking down and needed time to reset again. There are only so many times you can say the same thing over and over. If the last 7 blog posts didn’t give you a hint to my thoughts, I’m not sure what else will.

2) I am taking a much needed mental break from the market. I’ve been trading aggressively for the past 18 months and this current market is not conducive to my trading style. Sticking to a discipline is what separates the consistent traders from the “boom and bust” traders.

3) Keep in mind that I am coming from the perspective of a money manager who has clients. There’s a big difference between trading for yourself and trading for others. Warren Buffett’s 2 rules about money management are 1) Don’t lose money for clients and 2) See Rule Number 1. I am pleased that I moved my clients to cash last week and avoided much of the recent carnage.

4) I am so sick of people who tell me “The S&P is only a few percentage points off its highs.” I don’t trade the S&P. I trade individual growth stocks, many of which are down 30-40% from their highs. The S&P and Dow have held up better than the Nasdaq and Russell 2000 because people are rotating from growth to conservative names. That’s not a good sign and I wouldn’t be surprised to see the former indexes catch up on the downside.

5) Of course we will get some bounces, but I think the Nasdaq Composite eventually corrects down to its 200-day and then we’ll see what happens from there. I didn’t get suckered in yesterday (4/9/14) because the rally occurred on weak volume and there are still no stocks setting up that meet my criteria.

Again, I hate to be a broken record because there really isn’t much more to say. We are in a correction. It happens from time to time and you simply have to make adjustments. When we get out of it, there will be plenty of amazing opportunities to make money. Until then, I’m going to keep things light and stay defensive until conditions improve. Good luck!

I can be reached at: [email protected].

Follow me on Twitter @jfahmy
Follow me on StockTwits @jfahmy

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Tickers: , , , ,

Joe Fahmy Blog