What are your Investment Rules?

[kiora]

Its good to look for alternative views

"S&P 500 And VOO: Here's The Bullish Case"

https://seekingalpha.com/article/469..._free_eligible

"Smaller sectors of the S&P 500 offer higher reward/risk trade-offs and a shift in market leadership is occurring."
"what behaviors and elements of an investment process provide me with the best trade-off between making consistent positive returns, and not losing "big."
" the definition of an investor is a disappointed speculator!"
"1.Past performance in investing is focused on misleading aspect of that performance"
"period (1999-2013) in which the S&P 500 went everywhere. But after all that time, it averaged about 1% per year."
" neither should we assume that the only range of possible outcomes is the ones we've seen"
"That's a long time to go without many S&P 500 buy points producing more than a 6% annualized return"
"2. Too much focus on "picks" over process"

"The most important part of any investor's genetic makeup should be the constant willingness and ability to adapt"
"I think of every investment decision as being a trade-off between reward potential and potential for major loss"
"I'm constructing a living, breathing portfolio of securities, that work together like a rowing team."
" looking forward. Because when I do, I see a bull case for the market...not a "prediction" about what the market will do, but an analysis of what I think could be a higher-percentage shot for me than a lot of the "stay the course, own the market"
" Energy, Utilities, REITs and Basic Materials. Yet those 4 are a big part of my portfolio now."
"Consumer Defensive or "Staples" is 6% of VOO and Industrials, the most diverse sector of the 11 in that it doesn't tilt heavily toward a few giant stocks, is around 8%."
"that's 6 sectors totaling only 25% of VOO. That leaves 5 others that account for 75% of it. That has worked for a while, but I think the risk many investors are taking is in following the index too closely."
"A top-heavy index that blinds investors to the forward-looking opportunity"
"The index is capitalization-weighted, and when markets go up over time, VOO increasingly favors yesterday's winners. That feeds on itself for a while, but at some point it implodes."
" investors get taken advantage of this ever-present factor in investing, the desire to be part of the "herd.""

"Where's the bull case now?

I think it boils down to this:

1. The smaller S&P 500 sectors are where the higher reward/risk trade-off is

2. A proverbial "stock pickers market" is gradually replacing the dominance of a small number of stocks

3. In every sector, the strongest risk-adjusted performers will likely be companies that are not among the top few in their sector by market cap, but also not among the smallest."

"What's driving all of this?

Valuation is part of it, technicals are another big part of it, and the nature of market cycles is another key contributor"

"Past performance: don't get fooled again"

" Performance leadership can persist for longer than we think, but that "market of stocks" still has a say over time."

"Summing up...for now

My thesis here is simple:

1. The market is not what many think it is, following such a top-heavy, late last century-type period, the long-term value and even a lot of near-term upsides is likely to come from places investors are not accustomed to. That requires them to conduct a more thoughtful type of research than needed to get strong results in the recent past.

2. Past performance is valuable, but not simply applying it in one fell swoop. Markets are cyclical, long-term and shorter-term. That's going to matter more than ever now, given the newer market forces at work.

3. Many parts of the market took a breather the past few years, and that could end up being a "pause that refreshes" as opposed to needing a full flushing of the whole stock market, all sectors. The leading sectors that now dominate VOO are more vulnerable, and the smaller ones are more intriguing based on my stock-specific, bottom-up research I conducted to construct my 40-stock portfolio.

4. Stocks from every sector have potential. But the era of 5–10 stocks driving all performance for years at a time is, in my view, gradually ending."