I Am A Net Seller Of Stocks

I have been selling into strength since October and am up to 40% cash position.

This is a quick post as I head out to play in the Mid States Poker Tour. I understand gambling and investing. Today, the markets are more gamble than invest.

In the short-term, this year I think, but maybe into next year too, gamble a lot less. In fact, take advantage of the gamblers.

You will get your chance to invest at very cheap prices in the next year or so.

Liquidity up, asset prices up. Liquidity down, asset prices down. 99% correlation with long and variable lags and magnitudes of impact, but, still almost perfectly correlated.

Liquidity is falling and promises to fall more. The nearly $7 trillion of U.S. debt to be refinanced into next year screams “crowding out.” If you don’t remember that from Econ 101, do an AI search, any of them really, they’re all pretty good and getting cheaper. I love my multi-model Perplexity.

Here’s my latest interview on Seeking Alpha.

Now, you can’t go zero equities, that’s trying to be too perfect. But, you can cut your asset allocation to equities down to the low end of your risk profile range.

In my opinion, most people ought to be down to 40-60% equity asset allocation now, with very few S&P 500 stocks. That means no SPY or VOO. Index investors are in for a single digit return decade from what history, valuations and all the quant tell us.

Your equity asset allocation at this point, in my opinion, should be small and mid caps with catalysts that are less macro and market dependent. You want companies that are growing and either just turned profitable or within a year or two of profitability that don’t already have a sky high valuation.

Build a margin of safety into every position in your portfolio.

2nd most expensive market to M2 inhistory.

M2 is rolling over and could contract on the UST refinancing and Japan raising rates.

I say again, probably a very good time to get to the conservative edge of your risk profile.