I sold most of my stocks in US and HK portfolios in April, because they either touched stop loss levels or showed general weakness. Most momentum stocks experienced sharp declines during April/early May and I believed that this, coupled with other signals was a market top.
I still stand by my thesis, as the market slowly creeps higher every day. Why? My strategy is based on buying the best stocks into uptrends and shorting the worst into downtrends. And right now, I get almost 0 opportunities on the long side and plenty on the short side. Until now, growth stocks of all sizes and categories were advancing sharply, pulling indices higher with them, but that changed now: utilities, chemicals large caps and mergers are at the top of the bull, and these are stocks that usually don't pass my criteria.
So my US portfolio has only one stock, Michael Kors (KORS) and 86% in cash. My HK portfolio holds only Haier Electronics (1169.HK) with 80% in cash. I will start buying when I see opportunities but currently I don't. I see good short candidates and if the markets turn down (which I think they will within 1 year), I will be rewarded. I don't mind short term underperformance as long as my long-term strategy is working.
Now the UK and Indian portfolios are a completely different story! Most stocks there aren't even close to stop loss levels and the momentum trend seems still in place. India had a change in government recently, which spurred a 20% rally in equities so that can be easily explained and the bull might continue there. But FTSE 100 scored the weakest gain so far this year (5%) and growth stocks still rise with the general markets, which is in contrast with US (so much for correlation). However, the list of opportunities is getting smaller every day and UK will catch up eventually. Momentum stocks will head down and only defensive stocks will stand. I do not know when the top will come, but I believe it will be within one year. Until then, I can only wait and look for stocks to short!
I still stand by my thesis, as the market slowly creeps higher every day. Why? My strategy is based on buying the best stocks into uptrends and shorting the worst into downtrends. And right now, I get almost 0 opportunities on the long side and plenty on the short side. Until now, growth stocks of all sizes and categories were advancing sharply, pulling indices higher with them, but that changed now: utilities, chemicals large caps and mergers are at the top of the bull, and these are stocks that usually don't pass my criteria.
So my US portfolio has only one stock, Michael Kors (KORS) and 86% in cash. My HK portfolio holds only Haier Electronics (1169.HK) with 80% in cash. I will start buying when I see opportunities but currently I don't. I see good short candidates and if the markets turn down (which I think they will within 1 year), I will be rewarded. I don't mind short term underperformance as long as my long-term strategy is working.
Now the UK and Indian portfolios are a completely different story! Most stocks there aren't even close to stop loss levels and the momentum trend seems still in place. India had a change in government recently, which spurred a 20% rally in equities so that can be easily explained and the bull might continue there. But FTSE 100 scored the weakest gain so far this year (5%) and growth stocks still rise with the general markets, which is in contrast with US (so much for correlation). However, the list of opportunities is getting smaller every day and UK will catch up eventually. Momentum stocks will head down and only defensive stocks will stand. I do not know when the top will come, but I believe it will be within one year. Until then, I can only wait and look for stocks to short!
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