This portfolio manager’s strategy uses just one ETF and his own ‘crash indicator’ to beat the market by 530%

Markets got off to a stronger start on Friday, but it was a rough couple of days, with the S&P 500 entering a six-week loss streak, the longest in a decade.

With a war raging in Europe, prices rising everywhere and uncertainty about what central banks can do about it, investors may not be getting that traditional lazy, hazy summer.

Providing our call of the day is the president and chief executive of Stock Traders Daily and portfolio manager at Equity Logic, Thomas H. Kee Jr., who prepares for what could be a bullish period for stocks, saying it all has to do with understanding volatile to dawn.

Kee said he sees a shift coming, but not one where investors can “buy and hold for the next 10 years.

“This is a market fluctuation. In volatile times, the markets fall hard and then they go up, they come down and then they go up,” he told MarketWatch in a recent interview. And as the markets have fallen hard, stocks are ‘ripe to come back’ .

Kee warned customers of tumultuous times in December, when the Fed began telegraphing that it would remove stimulus measures and “the demand-manufactured component of the demand variable,” listening for the return of natural risk perceptions.

“What that means is volatility. In normal market conditions you have volatile conditions,” he said. “It’s not what people are used to because stimulation has been a part since most people are in the market these days, especially all new [investors]† Before 2010, markets were naturally volatile, he reminded us.

But given that the ECB is still buying aggressively and the Fed hasn’t completely cut its balance sheet yet, that means the made-up demand is still there, he said.

While market volatility left some investors unsure of what to do and panicked, Kee said he saw no signs of immediate crash risk, based on his own Evitar Corte model, which uses FOMC monetary policy to manage the risk of a recession. define a market crash.

What should investors do with this information? Kee has long been a fan of index ETF strategies and suggested investors do the same, buying or selling only index ETFs – he prefers the highly liquid SPDR S&P 500 ETF Trust SPY
He warned that it will take much longer for investors with multiple stocks in their portfolios to manage the risk.

Since 2000, an investor has only put money in the S&P 500 ETF SPY
and cash, which switched to cash when its crash indicator warned of high risk but all other times investing in the S&P 500 ETF would beat the market by 530%, Kee said.

Kee said there are two types of retail investors: those who like to trade and those who just want to hold on and stay invested. The latter should only focus on neutralizing their portfolio and focus on a market crash model that tells them if it’s coming and makes it more nimble. The other investor who likes to trade need only look at the daily or weekly pivot points for the S&P 500.

Stock Traders Daily/Stock Logic

Right now, investing in SPY is better than cash, but last December, cash was the better investment, he said.

Kee said their Fibonacci calculator just triggered a buy for the S&P 500 at 3,884. “This calculator is adapted for the stock market, based on mathematical formulas determined by human emotions, and without stimulus, that’s exactly what the market is left with,” he said.

The money manager’s message is clear: “The volatility is there, it’s coming and you better be prepared for it and your portfolio better be prepared for it too. Because it’s really hard for people who have never experienced true volatility to deal with volatility,” he said.

the buzz

Twitter TWTR
tumbling after Tesla chief Elon Musk said his $44 billion deal to buy the social media company was “temporarily on hold”, according to calculations that “fake accounts” make up less than 5% of users.

Robinhood HOOD
rises with news Sam Bankman-Fried, the chief executive of cryptocurrency exchange FTX Trading, took a 7.6% stake in the trading platform.

Confirm AFRM
stocks surge after buy-now pay-later group gains and executive reassurance.

Heading into his second term as Fed chairman, Jerome Powell said in a Thursday interview that the Fed may not be able to make a “soft landing” for the economy, but is not “actively considering” a 75 basis point rate hike. .

Import prices fell in April. May consumer confidence still move forward.

Europe’s plan to impose sanctions on Russian oil is struggling as Hungary says it will be too stressful for its economy.

Shanghai may be ready to relax its COVID restrictions, but growing cases in Beijing have residents there on edge. North Korea said six have died and thousands are sick with unexplained fevers after the country made the COVID outbreak public.

the markets

not mentioned

Shares DJIA


are higher along with bond yields BX:TMUBMUSD10Y

as the dollar DXY
flattens out. Oil prices CL00

are higher and cryptocurrency sales have decreased, with bitcoin BTCUSD
back above $30,000, and tense stablecoin TerraUSD USTUSD
also slightly up.

Read: Why does UST, LUNA crash? Collapse of an Ever $40 Billion Cryptocurrency, Explained

And: This Is How Much Money You Would Have Lost Had You Bought Crypto During Matt Damon’s ‘Fortune Favors the Brave’ Commercial

the tickers

These were the most searched for tickers on MarketWatch as of 6 a.m. Eastern Time:

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