One More Time For The Cheap Seats: Asset Class, Market, Sector, Stock

Busy day today so light posting, but after some frustrating conversations I’ve had lately, I feel the need to toss out the following Public Service Announcement:

One more time for the cheap seats…

It’s the Asset Class, then the Market, then the Sector, then the Stock.

Again – the Asset Class, then the Market, then the Sector, then the Stock.

If the stock asset class is not in favor, then the stock market isn’t either.  If the stock market is out of favor, then the sector will not matter that much.  If the sector isn’t working, then the stocks within the sector won’t work either.  Conversely, when stocks are in favor, and the market is trending up, and the sector is under accumulation, stock-picking is redundant, almost anything in the right sector will work.

Sorry, bottom-uppers.  It just is that way.

Are there exceptions?  Of course, there are exceptions to everything.  I saw a two-headed goat at the Westchester County Fair once.  Once.

In case you didn’t hear me up in the balcony – Asset Class, then Market, then Sector, then Stock.  You live in an asset allocation, ETF’d world right now.  Why fight yourself?

None of this is advice, I have no interest in telling anyone how to trade.  But as Diddy once said “I tell it how it is and you tell it how it might be.”*

In a down-trending tape, feed your buy recs and price targets into a shredder.  In an up market, dart-throwing monkeys can go head-to-head with the best and the brightest out of Wharton.

Over-generalizing?  Of course.  Could this change?  Of course.  But still.

That’s how it is.

*I can’t believe I’m quoting Diddy at 8 o’clock in the morning.  Gonna be a strange day.