A Big Drawdown...What Do You Do?

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Good morning…

I have been getting a lot of readers asking me about the current correction in stocks and ‘what to do’.

Because my personal portfolio is in a major drawdown, now would be a good time to talk about what it looks and how I think about it and what I have been doing.

First thing first as I shared on Monday when the $VIX spiked to 60, I added to my index positions. I use FREC.com (see promo at top of today’s newsletter) for most of this right now so I used the opportunity to buy some Semiconductor index ($SMH) which I doubt is at a bottom but in it’s steepest drop since inception. FREC just added this index in partnership with Van Eck and at no additional fees. The best part is the tax-loss harvesting for the index that automagically happens using FREC. Ellen and I added to our S&P index position as well.

My ‘degenerate economy index’ is also in a steep drawdown - still up 54 percent since inception over a year ago. I have been making small changes monthly adding and subtracting a few positions and trimming here and there. Here are the current positions:

Drawdowns are normal if you invest in stocks and after bigger than normal returns - which we have seen since the market bottomed in 2022 - even bigger drawdowns tend to occur.

That does not mean every stock in my portfolio or in the indexes is going down.

Yesterday $AXON hit all-time highs, rising almost 15 percent after reporting another great quarter of growth. I have owned this stock for years and covered it here in the newsletter in 2020 and early this year. I added it to my ‘degenerate index’ last month (lucky timing). The CBOE has also been hotting all-time highs.

On Tuesday, the Trends With Friends crew did a live show which went deep on the subject of ‘panics’ and the spiking $VIX. We each shared a few ideas as well. You can watch the full show on Youtube or Spotify.

I hope this helps.

Have a great day.