📰 Sunday Edition 43: Market Sentiment, Moving Averages, and Charlie Munger

👋 Hey, Mike here! Welcome to ✨ Sunday Edition 43 ✨ Each week I dive into the markets, the economy, and investing.

Quote of the week

"Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group … then to hell with them."

(Charles T. Munger, Poor Charlie’s Almanack)

Markets

Lots of movement this week with the S&P 500 flat and the Nasdaq still in the 5y lead at 144%.

Quite a bit of volatility lately, but the 50-day moving average (DMA) is still above the 200-day moving average:

Sectors

Communication services wins this week at 1.1% and Materials falls 1.6%. Information technology still in the 5y lead at 20.7% CAGR.

Economy

Not many big economic releases this week other than Initial Claims. While Initial Claims is down, the 13-week moving average is still trending up, signifying an increasing amount of people filing for unemployment on the average. This is a small sign of increasing stress on the economy.

Market Sentiment

New section! I borrowed the idea from CNN's fear and greed index. I like my version more:

This week's number of value of 59 is derived from vibes and nothing more. The market has been rocky lately with big moves in both directions. In my opinion, it's still showing that the market is still acting greedily. Everything feels top-heavy. (Just to be clear, I know nothing. We could experience 5 years of amazing performance in the market starting now, or we could enter WWIII and the second great depression. The truth is probably somewhere in the middle.)

In the future I may create my own formula that draws from market data. If I go this route, it'll focus more on long-term trends, not day-to-day market swings.

Notice the colors of the graph. People usually associate numbers and colors with "good" and "bad" but in reality, it's more nuanced than this. Extreme greed means the portfolio is probably growing quite a bit, but it also signifies overblown valuations. Extreme fear means the portfolio might not be doing great, but more opportunities to buy undervalued wonderful businesses are more frequent. Yin and Yang.

Portfolio

Oof. Another week of getting hit. The index is now outperforming me on a one-year basis. As always, the annualized number is what matters most. Pain in the short term, gains in the long term. Hopefully I'll get some quarter wins under the belt to help further improve things, but that comes only from investing in long-term winners. The score takes care of itself.

Here's what I'm invested in right now: