• Henri Caron

5th of April - Market Opinion based on eToro post

Regarding closing more trades, like I said earlier, I have been closing quite some positions in order to increase my cash position and decrease my exposure to the market. The market suffers strong volatility at this point and I don’t feel comfortable seeing that much of swings. Especially because it is my belief that this increased volatility is a sign of a yet increasing broad market uncertainty. There are signs, and I personally believe, that the major market bull run of the last couple of years might come to an end, and that investors know this, fear it, and start taking subsequent actions. Besides, some major macro-economic events such as the current trade wars, privacy scandals and increased interested rates for instance, are definitely not doing any good in alleviating this volatility. I fear that in the end, one of those (or other) events might spark a more severe general downturn and mark the beginning of a bear market.

Sadly, as a non-magician or professional future reader, I cannot say this with 100% certainty. According to Warren Buffet, "In the business world, the rearview mirror is always clearer than the windshield.” The past two negative months might just be a major market correction instead of the beginning of a bear market. So will I close more positions? Just as with diversification over different stocks, or even asset classes, with this I am diversifying over both ideas (correction vs. bear market) by still remaining invested, albeit way less then I used to. If I would be wrong, and this turns out to be a slight correction of a couple of percentages, I will have suffered less on the correction, but most probably I will enjoy less post-correction profits. If it turns out to be a bear market, I will suffer way less losses and I will be able to buy back stocks at way cheaper prices.

At this point I am invested for a little less than 45% of my eToro portfolio value, holding 55% in cash, and I am ready to inject even more money into eToro if this turns out to be a major bear market, allowing me to buy cheaply. Again according to Warren Buffet: "Be fearful when others are greedy, and greedy when others are fearful". At this point, and according to what I feel and see from the market, I feel comfortable with this. In a post I posted about a month ago, I have advised my copiers to do the same: Either start copying me when I have suffered some consecutive negative days, either being prepared of adding funds after such days. By doing so on your level, you can further leverage my actions. 

However, since I have been closing quite some positions over the past weeks, in combination of having my portfolio rebalanced about 3 months ago, my portfolio has become unbalanced at this point. That is why I intend to do a rebalancing exercise on the invested part (45%) of my portfolio in the following weeks in order to spread my risk again.


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