On Pointe – Wealth Management Edition
Waiting for a pullback… I’ve heard this Story before!
As you can imagine we talk to a lot of different people regarding the markets. We talk to traders, investors, fund managers, retirees, beginners, and many in the emerging industries. The one common thread is everyone seems to have their opinion.
This summer, I had an engaging conversation with the CEO of a MedTech company here in Annapolis, Md. We turned our conversation from the micro-sector issues of MedTech to broader stories of the Tech Council. Finally, we moved on to the stock market.
We focused most of our discussion on valuations and how the stock market has gone up.
His focus was trying to “get in” on the AI (artificial intelligence) trade with a couple of names. The problem is these stocks are making a run and provide little opportunity to “buy the dip” or find the magical “pullback”.
As we discussed further, I can tell his frustration. However, he’s not the only one “frustrated.”
One theme that seems to be developing is the “I’m waiting for a pullback.”
The “pullback” theme is one where the person is questioning the current highs of the market. Their thoughts are that it may drop in price so they can possibly purchase shares at cheaper prices. That sounds like a potentially good scenario, right?
Often during these “surprise” rallies of the markets, we get those comments like “recession is on the way” or the “other shoe is going to drop” or they blame the Federal Reserve. (Yes, we have opinions regarding the Federal Reserve, but we try to refrain from blasting them about the markets… there are plenty of other things we concern ourselves with!)
In our observation, we underwent a very sharp drop in the markets in March 2022. So, what kind of pullback are people waiting for?
Yes, many different markets are returning to their peak highs. But what we have seen in the past is that markets may continue for a long time. Think of the markets post-Great Recession….
What has worked for us in the past is to invest along the trends and not to fight the trends. Whichever direction the trend is we go along for the ride. Do we debate these trends? Absolutely!
Yet, our experience in adopting a method and discipline of following these trends allows us to operate in many different market conditions. Even markets that don’t seem to want to “pull back.”
In short, you need proper indicators to help guide investment decision-making. There are better times to invest than others, you need to know the difference. Also, you need to know which sectors to look at versus the ones to avoid. Last, the “buying” of an investment is less of a problem… it’s knowing when to sell.
Bringing this argument full circle, if you have a process to help you sell, then it frees you to find those “buys.” You’re deploying a risk management strategy before you buy!
In our view, waiting too long for a pullback could mean missing out on potential gains. Almost like trying to time market bottoms, timing market tops can cause just as many headaches.
Take care,
James S. Gibbons CPFA
Alpha Pointe Capital-Founder/Wealth Manager
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Registered Representative of Thurston Springer Financial and Investment Advisor Representative of Thurston Springer Advisors. Securities are offered through Thurston Springer Financial, Member FINRA, and SIPC. Advisory services are offered through Thurston Springer Advisors, an SEC Registered Investment Advisor. Alpha Pointe Capital is a DBA of Thurston Springer Financial and Thurston Springer Advisors.