Everything is on sales

I'm kind of in a buying binge these days, buying something nearly everyday this week, especially during selloffs.😇

You see, the headlines cannot be worse: The stock market has the worst January in the past 90 years! Actually it is the worst in all the market's history with record. Scarry, right?! Some indicators are even worse than those back in Mar 2020 when we got hit by the COVID. That's why it is difficult to blame those who are eager to sell no matter what. But that's actually the best time to buy as long as you have the gut and discipline😜 

Just to be clear, I'm not saying we are totally out of the woods by now and the worst is already over. I'm not sure about that. The TA damage has been done quite severely and it won't be that easy to recover. I'm just betting for a quick rebound, which may just be a dead cat bounce that may be followed by another more severe plunge. There is also a real possibility that we are in the process of coming off the ultimate bull market top and start to roll over to a bear market in the months ahead. It is too early to say but don't just count this out. As a trader, I'm more focused on a short term time horizon and deal with trades as the short term trend goes. But as a long term investor, it is also important to think about something more fundamentally. As such, I'm sharing something below that my friend has kindly shared with me recently. It is important to do some honest check on your portfolio with the following 6 checkpoints:

So run your portfolio through the six-step checklist below. And you'll be ready for anything the market throws at you…

1. Is your portfolio diversified? Numerous studies show that asset allocation accounts for more than 90% of your investment returns. Greater diversification also results in lower risk. So, a good start is owning a mix of domestic and foreign stocks, bonds, commodities, real estate, and gold.

2. Do you own true alternatives? Be comfortable with being uncomfortable. In other words, think outside the box. Get some exposure to "true" alternatives like collectibles, cryptos, private placements, and annuities. They'll generate long-term outperformance while shielding your portfolio in the meantime.

3. Do you have a rainy-day fund? Cash is often a forgotten asset class. But it gives you optionality. You never know what opportunities life might throw at you. Whatever they are, cash typically "meets the need" better than anything else. So, it's crucial to hold some. We recommend allocating up to 10% to cash.

4. What are your position sizes? Position sizing refers to the size of a position within your portfolio (the percentage or dollar amount of your investment). Our simple rule of thumb is: If a position gets stopped out of your portfolio, your maximum loss should be no more than 2.5–5% of your portfolio's value.

5. Do you use stop losses? Stop losses let you control how much you're willing to lose. They eliminate emotion (an investor's greatest enemy) from sell decisions. And they protect your investments from devastating losses.

6. Do you have an allocation to safer stocks? Invest in companies with quality balance sheets, attractive valuations, solid earnings, and strong growth prospects.