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Market Memo To Educational Members (1/14/21)

Here is a note I sent to Educational Members tonight (Thursday, January 14th). Please keep in mind that I will not regularly update this blog with my current market thoughts. I am just trying to give people a feel for the type of detailed analysis I am providing with my educational product. If you are looking for regular real-time market analysis and stock idea generation, please visit the following link to sign up: https://joefahmy.com/investor-education

As I mentioned in recent videos, I was planning on reducing my exposure this week if we saw continued strength. I took advantage of the strength in many of our stocks this week and locked in some profits. I can’t repeat this enough: I am NOT turning bearish. I am simply locking in gains. I am also giving you visibility to my process of taking gains into strength and having some cash available for the inevitable pullbacks.

Going back to mid-November, I discussed increasing my exposure into the potentially favorable seasonality. Traditionally, November through January are strong months for the markets. I discussed several times that I would increase my investment levels further during the Santa Claus rally because there were so many stocks acting well, and also during this OpEx week. I am very grateful that things worked to plan.

From here, I wouldn’t be surprised to see a pullback during the second half of January. It’s been absolutely insane to say anything negative about this market because it’s been so resilient. However, so many stocks are currently extended from proper buy points and many sentiment measures are showing high levels of bullishness.

The decisions you make from here should be based on your own timeframe and overall investment objectives. If you are a longer-term investor and have strong entry points on your stocks, then stick with your plan. For example, the two recent spotlight stocks are up approximately +15% from their buy points and I still like them longer term (and I still own them for clients). If you are a shorter-term or tactical trader, there’s nothing wrong with raising some cash. You can do this by reducing the number of positions you own (especially the ones that haven’t participated in this rally) or by reducing the size of your positions. I am not encouraging shorting because the market is incredibly resilient.

Again, I am by no means bearish. I had a very strong year for my clients last year by adhering to my plan of taking gains into strength and putting cash to work at logical support levels. I am trying to do the same now because I am off to a strong start this year. If the market continues to grind higher, I am not too concerned because I still have exposure. I’m more looking forward to seeing which stocks hold up best and using relative strength if the market has a pullback. Good luck and I will discuss this further in this weekend’s video.

Thank You,
Joe Fahmy

If you are interested in more content like this, please visit the link to my Educational Product: https://joefahmy.com/investor-education

I can be reached at: jfahmy@zorcapital.com

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

Focus on Your Mindset in 2021

There are so many books about the stock market but very few that discuss market psychology. It’s a shame because 80% of your investing success has to do with your psychology. I don’t care if you have the greatest strategy in the world. If your head is not right, you won’t execute it properly.

2020 was a strong year for the US markets. Unfortunately, many people struggled last year. When you dig into the reasons why, you will find the main factor was their mind wasn’t clear. Covid affected people on so many different levels: financially, relationships, health, and their jobs. If your overall mental well-being is affected by any of these problems, you have to work on fixing them before you approach the markets, even if this means taking some time off. Investing involves too many emotions and if you don’t have a strong mindset, you will likely gravitate towards making poor decisions. Here are two ways to help:

1) Improve your self talk. As David Goggins says: “The most important conversation you will ever have in your life is the one you have with yourself. You wake up with it, you walk around with it, you go to bed with it, and eventually you’re going to act on it…whether good or bad.” We all have an inner dialogue in our heads. It’s not that we’re crazy, but it’s the the stuff we tell ourselves that is crazy. Imagine if someone put a speaker up to your mind and broadcasted the things you said to yourself? You would be locked up in a mental institution. Change the negative stories you are telling yourself into positive affirmations and it will completely change your mindset.

2) Stop comparing yourself to others. Comparison is the thief of joy. The number of people who are so concerned with what everyone else is doing is mind boggling. These people don’t care about you, so why do you care so much about them? One characteristic of successful people is their desire to improve themselves. Rather than focusing on others, focus on improving yourself! Someone will always be doing better than you. Letting that affect you will lead to a very toxic mindset.

I can continue on with so many other ways to help such as: exercise, gratitude, doing post analysis of your work, being honest with yourself, taking breaks from social media, and surrounding yourself with great people. I think we all know how to improve ourselves, it’s just a matter of having the discipline to do it! Life’s too short. Stop giving a shit about what other people think and do everything in your power to make progress and to overcome your fears.

If you did well in 2020, congratulations! Just remember to stay focused, keep working hard, and stick to your discipline. Also, stay humble and keep your expectations realistic for 2021. We’re in a unique market driven by liquidity that has never been seen before in history. Take advantage of it, but stay humble and manage risk. I find that once we think we know everything and start to get cocky, the market has a unique way of humbling us.

I can be reached at: jfahmy@zorcapital.com

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

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