You Better Put The Handbrake On


If I have learned something during the last 25 years of my professional career in financial markets, it is that when ten strategies are opened and five are winners and five are losers, something is wrong in the market. When that happens, the ideal is to put the handbrake, hence, for the last two weeks, I have been very reluctant to open new investment ideas to incorporate them into the Ecotrader list.

Another reason why I am reluctant is because of the high exposure to the stock market that we have recommended in Ecotrader, which is at levels of 75%, very close to the limit that we handle of 80%, which I do not usually exceed, since it is clear to me that Most of the stocks we have in the monitoring table have a higher beta than the benchmark indices. That beta measures systematic or market risk. The more volatile a stock is relative to the index, the greater its market risk.

With that exposure, they should be comfortable if the stock markets continue to rise, which seems complicated if we look at the overbought and bearish divergences that exist in many indicators, which point more towards the possibility of seeing a consolidation than towards a context of greater rises. This pause in the ascents I do not see as a negative, since if there is consolidation, it will be more likely that we will have a Christmas rally. Otherwise, better fasten your seatbelts because we could have a final stretch of the year of everything but calm.


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