This blog is addressed to the many thousands of recent new StockCharts subscribers. The explosive growth in our ranks suggested to me that a little welcome tutorial would be valuable. Any welcome message to an investor arena that aspires to be truthful must acknowledge upfront the "Paradox of Choice".
Much like your entertainment streaming services which are overwhelming you with thousands of enticing shows, the stock market offers a cornucopia of options that are easily hundreds of times more. Therein lies the challenge. How do you stand in front of this fire hydrant of choices and take a drink? This is precisely why we are here for you.
I've been writing the Traders Journal since 2012 based on my three decades as a full-time investor. I only trade my own money; I have no clients. Grayson has been contributing his expertise since 2015. Think of this blog as the quintessential anatomy lesson about the stock market.
Seven Keys to the Kingdom
(1) Let me say upfront that this blog is not for you if you believe that making serious money in the stock market is about some insider's indicator or algorithm or if you are not willing to humble yourself , In chapter 3 of our book, "Tensile Trading: The 10 Essential Stages of Stock Market Mastery", we talk at length about the Investor Self and the fact that you need to acknowledge you are most responsible for the profits or losses you'll incur. You might as well go home now if you don't ascribe to these tenets because the market will inevitably humble you and then charge you for the tutorial. In other words, focusing on your beliefs and behaviors is worthwhile.
(2) Even the richest guy in the world has only 24 hours in the day. Time is more precious than money. As an investor, you must constantly consider how you spend this currency called "your time". Tools that optimize your analysis and minimize your time will maximize your profits (and your sanity). This is what you should aspire to.
(3) You need a roadmap of routines that's carefully orchestrated and personalized. These routines provide the mandatory feedback for your investing endeavors. Not unlike those reflective "Botts' dots" you see on highways out west that provide you auditory and tactile feedback when you veer outside your car lane.
(4) Motivation versus discipline — don't get them confused. Investing can be fun, but don't think of it in the same light as, say, gambling. Gambling is entertainment while investing is serious business. I have the discipline to trade the markets because I find them both entertaining and fun, but I never lose sight of reality. I'm here to make money, and if I lose focus and inadvertently pause my discipline, it will cost me. Focus & fun!
(5) Simplicity trumps complexity. To many of you overly educated investors, this is counter intuitive. However, the body of academic research supports this. My own experience over three decades of trading supports this. I have my methodology and organizational framework which isn't really complicated, and granted I do have many years of intuition baked into these gray cells. But I'm consistently profitable. More is often literally less. You don't need another new indicator. Indeed, you probably need to jettison an indicator.
(6) High IQ doesn't necessarily equate to successful investing. This is a corollary of the previous simplicity rule. The example that comes to mind is when we discuss the exit disciplines of investors. There have been a number of studies proving that former salespeople often make great traders. They are used to customers saying "no thanks" — perhaps up to 70% of the time. They don't dwell on these nay sayers because they realize that ignoring them puts them closer to the next customer who'll say "yes please". They quickly fold ‘em and move on! Often, high IQ individuals can't exit like that and can't move on. They have trouble acknowledging their former "yes, yes" stock now saying "no, no" to them. You see how it usually comes back around to your own behavior.
(7) Learn to think in probabilities. Embrace probabilities. Our "Tensile Trading" book literally shows you how to stack one probability enhancement atop another until you find those investment opportunities with the clearest likelihood of success. But understand the downside as well. You are not a loser if you lose three out of ten trades. If you played baseball and you ONLY hit seven out of ten times at bat, how much would they pay you? Likely any amount you want. Embracing probabilities diminishes anxiety and panic. Fear is idiotic. Impulsive trading is idiotic. Embrace probabilities and live with a NO VICTIM mentality.
What's a ChartPack?
Think of it as a dashboard. You wouldn't drive your car without a dashboard. A ChartPack is your dashboard for stock market investing. It's simply a professionally curated collection of ChartLists — each pre-populated (with ticker symbols) and pre-formatted (with appropriate charts and indicators). It is visual analysis on steroids. They're organized in a top-down approach to facilitate the analysis of the overall global markets, moving into sector analysis, then drilling down into the industry groups, and thereby exposing actionable and the highest probability stocks which are the most timely and tradeable. There are also ChartLists which are populated with historically significant technical, fundamental and economic indicators — for example, the three "Permission to Buy" lists.
The majority of the ChartLists have extensive educational notes (below the ChartList summary) that have been contributed by our user community over the past eight years, and this user community now numbers in the thousands. Your ChartPack also has free quarterly updates for a year.
The Power of Your ChartPack
Investing is like an episode of Iron Chef. You are given today's ingredients and your objective is to make something tasty and cool. The ChartPack literally allows you to peel back the stock market onion and expose the best opportunities without tears.
- It captures the massiveness of the markets and organizes them into only the essential ChartLists — rendering them both digestible and straightforward.
- The heavy lifting has been done for you. This organizational tool represents thousands of man hours of fine tuning.
- 100% transparency. An investor must have routines. You can design and build your own ChartPack, but in reality it's much easier simply to personalize this one to fit you.
- Although the ChartPack is based on two full-time investors' own organizational toolkit, the user community contributes mightily to the enhancements and betterments on an ongoing basis.
For those few investors who've read this far and truly aspire to excel in this investing arena, here's how — step-by-step.
- Devise a personal mantra. Repeat it daily and keep reminding yourself of your pledge to stay-on-course and remain dedicated to your objectives. Remember this: a life without conviction is meaningless.
- The Traders Journal blog has a list of recommended books to read.
- Read our book, "Tensile Trading". It was the tool I used to hand the investing baton to my son. It's 100% candid and transparent, and it includes what I deem to be the "greatest hits" from the two dozen books I've recommended previously. It's based on our combined 40 years as highly-active investors and over two decades teaching this material.
- Read archived Traders Journal blogs.
- Download the Tensile Trading ChartPack and organize your routines and your ChartLists.
- Stay engaged. It will be worth it. Becoming a consistently profitable investor is akin to running a marathon at a sprinter's pace. Remind yourself daily that to excel and make serious money requires both energy and conviction.
Now, onward – let's dive into some of this quarter's updates and improvements:
#205: Single Country Funds
Just a reminder to those of you who've become possibly USA-centric in your investing perspective. The ChartList of country funds presents sixteen (16) equities that have outperformed the S&P 500 (SPY) over the past six months. Many with returns more than 30% above and beyond the S&P 500. Just saying!
#416: Top Six Stock Picker Portfolios
This little gem of a ChartList continues to generate VERY profitable actionable ideas. Remember: these extraordinary stock pickers consistently show you their own winning stocks. All six have outperfored the S&P 500 over the past one year, two year, three year, five year and 10 year timeframes. Truly remarkable! This year, DexCom Inc. (DXCM) showed up here out of nowhere with five of these stock pickers jumping onboard. Year-to-date it's up over 86%. This quarter we see the majority of funds increasing their positions in Shopify (SHOP) and Nvidia (NVDA). Don't miss the extensive insights in the "ChartList Notes" section below the Summary of ChartList #416 (and also below a majority of the other ChartLists).
#420-12 to 420-90: Fidelity Sector Funds
Over the years, these ChartLists have paid for a lot of toys, and we continue to mine for these insights. The 44 Sector Funds cover the entire gamut of the markets. Here are a few of the big picture observations:
- 38% of assets are in Mid-Caps and Small-Caps.
- Foreign stocks account for approximately 10 - 15% of the holdings.
- Relative to the S&P 500 allocations, Fidelity managers have allocated 3.2 times the position size for Basic Materials stocks, 1.5 times for both Real Estate and Industrials while under allocating consumer defensive stocks.
- Not surprisingly, half-a-dozen separate funds all own Visa (V) and Facebook (FB).
- Interestingly, in the top ten largest dollar holdings for these 44 funds, we find the following: United Health Group (UNH), Union Pacific (UNP), Home Depot (HD), United Parcel Service (UPS) and Lowe's (LOW).
#450: US Dow Industries
As they say, you are the company you keep. And nowhere is this Law of Groupings more apparent than when you look at this ChartList of the Dow's 152 industries. Outperformance is always to be found here — therefore it justifies your regular attention. As I write this (October 9, 2020), the S&P 500 is up over 8% for the year. But with a quick glance at this industries ChartList, it's obvious that the automobiles and auto parts industries are hot.
Actionable investing could move you into an Automobiles ETF (CARZ) which is up 22%. A reasonable mutual fund option would be the Fidelity Automotive Fund (FSZVX) which is up 29% for the year. If individual stock picking is your preference, both the ETF and mutual fund holdings suggest Tesla (TSLA) which is up nearly 400%. So you see with the right tools, ChartLists will point your way to profits.
#640: Institutional Dividend Darlings
This ChartList contains three top dividend-oriented mutual funds, the five most popular dividend-oriented ETFs and the 23 most common stocks held by these funds. A number of our ChartPack user community have praised this ChartList as a great source of stock ideas to bolster retirement portfolios since both growth and dividends compound tax free.
This quarter, four new stocks appeared in the top ten holdings owned by these funds:
Don't forget to read the "list notes" there!
#420-12 to #420-90: Fidelity Sector Funds
Now, last but not least, let's take a look some of the standout highlights from this quarter's Fidelity sweep. Every quarter, we track the changes to the top 10 holdings of Fidelity's Select Portfolio funds. These are big money funds managed by some of the most skilled, well-funded, well-researched teams in the business. For us retail investors, following what the "smart money" is buying (or selling!) is a powerful way to piggyback on some of the largest accumulation campaigns out there. When a stock you own has institutional support at the highest level, it can be a very strong tailwind for your position. So, here are a few things we noticed:
- The teams behind the Air Transportation portfolio (#420-12) and the Transportation portfolio (#420-86) were clear buyers of the same major delivery company. With the boom in online shopping this year, it's no wonder that this stock has been an absolute rocket. The trend alone is enough to catch our attention and earn a spot on the watchlist, but to see the heavy institutional support too – that's the full package.
- Another hot industry this year has been Biotech, so it was no surprise to see that the Fidelity Biotechnology portfolio (#420-18) had a very active quarter. In particular, the fund took a big big BIG position in Vertex (VERX). That stock had actually been dropped from the fund's top 10 holdings list last quarter, but clearly the smart money sees some room to run here and is adding to the position now.
- In the Computers portfolio (#420-26), a substantial position in Dell (DELL) was established. The stock is trending beautifully and trading near all-time highs, so to see some institutional support behind it is a nice boost. With millions of people continuing to work from home, laptops from companies like Dell make a lot of sense for the current world we're living in. One to watch for sure!
- The Environment and Alternative Energy portfolio (#420-42) made a fascinating move this quarter, putting its theme to work in a creative way by investing in a certain hot automative stock. I'll let you take a guess which one and confirm when you take a look at the ChartList, but I'll let you know that this was no ordinary buy. The stock did not appear on the portfolio's top 10 holdings list last quarter, but just a few months later it's now the largest position for the fund. In short, that's some MEGA buying in one position by the minds behind the Environment and Alternative Energy portfolio. Support like that from the big money players means a lot.
- And finally, lots of shakeups in the Real Estate Investment portfolio (#420-74) this quarter. With so much turmoil in that space, it's interesting to see how the Fidelity team behind this fund is positioning for the new "all remote" state of work. Definitely take a look at what this team was buying – and selling – this past quarter.
BONUS – The ChartPack Is Now ACP Ready!
As you've surely heard, StockCharts has recently launched a new interactive, full-screen Advanced Charting Platform - StockChartsACP. This powerful all-in-one charting and analysis package brings you true dynamic charting with the ability to scroll back and forth through time, drag indicators and overlays up, down and around your charts, manipulate the y-axis with your cursor and much more. In short, the future of Technical Analysis and the next generation of StockCharts technology.
Now, one important feature of the new platform is the ability to view ACP versions of your existing saved SharpCharts. You can open the ChartLists sidebar (on the right) and click the "SharpCharts" tab to see your current ChartLists. You can then click on each symbol in the list to see an ACP chart that will very closely match the saved SharpChart. It's a great way to explore the new world of ACP, or quickly get set up with some of your favorite indicators and other chart settings.
What this means for all you ChartPack users is that you can easily explore the ChartPack in ACP, right out of the box. When you install the latest version of our ChartPack, all of the ChartLists and associated SharpCharts will be installed into your StockCharts account. You'll then be able to head over to ACP and browse through dynamic versions of all the charts included in the ChartPack.
Already have the ChartPack? Here's how to upgrade:
- Log in to your account, then visit the "Manage ChartPacks" page (accessible from the bottom of the Members Dashboard or from the "Your Account" page).
- In the table that appears, find the entry for the "Tensile Trading ChartPack" (if you don't see the Tensile Trading ChartPack listed, that means that you haven't purchased it. Click Here to do so now).
- Click the "Re-Install" button next to the Tensile Trading ChartPack to start the update process
The download should take about 10 seconds, after which you can explore the new ChartLists and other updates!
New to the ChartPack? Here's how to install it:
If you'd like to add the Tensile Trading ChartPack to your StockCharts account, Click Here.
Trade well; trade with discipline!
- Gatis Roze, MBA, CMT
- Grayson Roze, VP of Operations, StockCharts.com
Co-Authors, Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016)
Co-Presenters, How To Master Your Asset Allocation Profile