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Transcript

SPEAKER_00 0:11

Well, welcome to Tactical Investing for your strategic plan. I am Mark Melrose, author, investor, and United States Marine Corps veteran. So let's look at what happened last week. But before I jump on that, the closing numbers from last week, we'll start with there, I guess. The SP 500, you know, on Thursday, and it was a short week last week, Thursday, was uh down uh or SP 500 was actually unchanged. We saw the NASDAQ up 1.08%, uh the Dow was up 1.14%. Uh we saw interest rates uh close around uh 4.3% mark. Uh now we saw a lot of things happening last week. Uh so I think it presented a perfect opportunity uh with this uh the week's economic, financial, the geopolitical events, that uh several uh several thoughts come to mind. And I want to think it's a perfect opportunity to talk about what you need to look at for plan B or C D. Uh that's because I had it asked to me once, uh Mark, how can we plan for the unknown if it's unknown? Well, okay, fair question, but know it. In other words, there's always you know you can always plan for as best you can for what can happen, what is possible. Uh you know, is it possible for the market to crash? Uh yeah. Is it likely? No. Uh so how much should I prepare and be ready for? Uh for disasters, you know, that's one thing in a portfolio market, but uh be prepared to react to certain industries. For example, uh, you know, AI stocks and industry uh technology industry, they took a bit of a beating last week uh with uh the thought of higher interest rates or interest rates uh staying where they are for a longer period of time. Those are uh interest rate sensitive companies. So we saw them beginning of the week really get beat up. Uh they finished the week okay, but uh you know, they're down and not looking good. Uh but today, and I'm recording this after the market closed on uh uh Monday, the uh July 6th, and we see that uh you know they they can bounce back and they are um still down from where they were a couple of weeks ago. Uh then uh we also uh saw uh you know so we saw you know the headlines coming up and meet people trading on those headlines. Uh we saw investors take profits last week and money started to rotate into other sectors. Um and we you know the interest rate sensitive sectors though they declined, like I said. And we now believe that the Federal Reserve would uh keep interest rates at their current levels. Uh but the uh stocks, like I said, they got beat up. Uh Nvidia, Bloom Energy, and Micron Technology. Uh I say Bloom Energy, it's not a technical company, but they're they're one of the companies that supply uh oil or energy, I should say. No oil, they provide energy to uh database companies. Um, you know, with uh so tactical investing is uh being always prepared. So ask yourself uh these questions when you're looking at trying to figure out this plan B. You know, I want you to uh consider the Straits of Remoose and how threatened they are. Uh is the disruption gonna uh cause uh global oil supplies to push higher uh or even significantly higher? That could be quite or and then come down and still be high, right? It's uh so that we you know oil prices being high too, you know. Remember that would uh re-ignite inflation, uh at least oil price or uh interest rates up uh for any length of time. It's going to definitely have that effect. Now, also next week, uh, or yeah, also next week, industry or there's not a lot of data, economic data coming out. Um, but the following two weeks, 13th and the 20th, those weeks, uh, we're seeing some data that come out there that I'll be looking at, trying to figure out uh what my plan B is to uh give to you. Um and you know, focus on uh, you know, we focused they focused last week on the uh unemployment rate. Uh you know, they looked at the farm, non-farm payroll, employment uh uh rate, the wage growth, uh all they're uh you know a lot of people are thinking that okay, the uh labor market's uh cooling down a little, which would uh you know remain uh among the most important uh Federal Reserves look at, they keep an eye on employment and interest rates. So if that economic in interest rate uh goes down, it's gonna go down because uh they're not afraid of uh employment being high and strong. You know, a stronger than expected labor market, and let's let's do a uh review here. Uh we know a stronger economic market uh uh is uh consumers continue to spend, right? Uh inflation pressures remain elevated with all that spending. Uh interest rates uh are likely to stay higher longer. Uh that's uh that's not good for uh uh the industries, uh technical industries, but here's the trap not to fall into, and that is don't take this information and take an industry that's interest rate sensitive and say, okay, I gotta sell all of them. No way. Uh look at it, each and every single company, and evaluate them on their own, not based on uh you know the markets, how the rest of the market is. Uh you know, evaluate, have plan B for that stock if this happens. Uh, you know, have plan B done you know for an overlook of your portfolio. Uh, you know, that's where plan B, C, and D, the levels of it, have it at all levels. Um, you know, we also know uh, you know, come on, higher interest rates, uh, you know, they place uh they'll place a lot of pressure on uh high-tech companies, and we know that to be true, but again, keep it the rifle, not a shotgun approach to your portfolio. Uh as we enter in this uh second half of the year, ask yourself these questions, you know, like uh which sectors continue to demonstrate the market leadership? Uh where have uh valuations become uh excessive? A lot of people say these uh tech companies like Nvidia and and others and micron technology, a lot of profits in there, kind of hard not to take them, but uh I think there's still room up there. Uh a lot of people thought about that in the uh uh maybe the first year of Apple and Microsoft when they came out. They said, Oh, these are too high, and they sold and they missed a lot of uh upside movement, and it's happened more than once to more than one industry and more than one company. Uh so again, rifle, not a shotgun. Uh so uh where can I uh deploy uh my cash reserves? There's your plan B, folks. Uh you know, 20-30% in cash. We have a stock go down and the market changes, it goes down. You can do several things. You can take you got that cash to buy more of it, or it went down and it looks like it's gonna stay down. The reasons I bought it are no longer strong there. Uh I do need to rotate into a stronger economic uh viable section. So I'll take my cash reserves and I'll buy something new. The one thing I don't like though is maybe you don't want to sell it, but you have to. It's down while it's down, I have to because I have no cash reserves. So I gotta sell something to buy something. That's why you got the cash reserves. I don't like the idea of selling something in my portfolio that I like so I can buy something else that I also like. Uh I would rather have the cash ready to go. Uh that's why we're gonna out that's why you're trying to outperform the market with less risk. You're trying to outperform the market with less risk. I'll say it again. And that is very important to keep that cash position. It can also uh mitigate some of that risk. You know, uh, I mean, there's a lot of important things that happened last week. Uh you know, the Middle East tensions, uh, they had a potential to you know, call a uh make a major impact on uh oil supplies. Uh we saw oil prices uh as the market real-time inflator uh indicator, inflation indicator. So as oils go up, that's gonna push uh inflation up higher. Uh we saw the Federal Reserve outlook, you know, which you know they're dependent on the inflation and employment numbers. So we're keep they're talking still about keeping uh prices uh or interest rates where they are. And keep in mind there's gonna be more pressure on our Fed chairman at the next meeting to bring them down. You know, they they like the idea that those uh you know interest rates could go down, and our new chairman is sensitive to the pressure that could be put on him, otherwise, he wouldn't be there. Uh so keep an eye on that. Uh also uh you know the AIX uh leadership uh it's still there despite all the periods of volatility. We saw them nothing really uh out there beating up the uh the stocks that have been strong. Uh they're still got the same reason. There's no uh real decisive uh issue with uh one company. Uh there's plenty, in other words, there's plenty of room in the market for who's playing right now. Uh and we have some leaders in that uh and and we keep them. Nvidia, keep it. It's still uh it's still linear, it's still a leader in uh chips that uh work with AI, uh work with the data. They need that those chips. Um so we you know, we also saw something interesting though, uh last week, uh institutional portfolio uh repositioning at the beginning of the you know the second half of the year. Uh this increases uh you know likelihood, a sector location uh rotation, I should say. Um you know, never uh never look at the broad market uh weakness, but they can rotate from one sector to another, and if we see some you know uh big chunks, uh we start seeing the uh uh you know in two-stroke investors start talking that way, then that is something we need to also consider. Um so what's your plan B? Your plan B is cash. Uh I'll leave you with one other thing. Uh fuel cell. Take a look at that. I bought some uh last week and I bought I put it as about uh one and a half, maybe two percent of my the portfolio, uh uh risk moderate uh portfolio, moderate risk portfolio, however you want to say it. Uh so that is out there. Uh look it up, I like it. Now keep in mind though, uh any uh any investment advice I give here, anything I say, you need to consult your personal financial advisor. He knows you. Uh so consult your financial advisor, and the opinions, they're mine, nobody else's. So you're getting my opinion, my recommendations, but before you take action, I do encourage you to discuss it with your financial advisor, all right? Alright, so let's see here. No, no, like I said, now is a successful uh tactical investor. You gotta be prepared for those uh multiple outcomes. So we have that plan A, B, C, and D. And I'll leave you with my favorite quote. Uh look to the skies, look to the planets in the stars, so they remind you of what is possible. Yet keep your feet firmly on the earth, for it is here on this ground in this life that your journey unfolds and your greatest achievements are made. I appreciate everybody listening. Have a wonderful week.