Rule Du Jour: Rule #39 Net Mending Time (Patreon)

My Net-Mending Rule

As you know, per rule #26 Time and Place, Net Mending Time is adjacent this this rule. During market peaks or "rough seas," smart investors focus on preparation rather than aggressive trading. As you know I am slowly taking profits, selling out and bagging cash while still finding Alpha here and there. Rem when markets appear overvalued or volatile, it's time to tend to the following areas:

Portfolio Maintenance (Mending Nets)

• Review and rebalance existing positions - I did some of this in Dec.

• Build cash reserves - doing that for last 3 mths.

• Update investment watchlists - always seeking alpha

• Strengthen risk management systems - building Rotation Model

• Research potential future opportunities - non stop searching for AI plays

When Market Conditions signal us to "Stay Ashore"

• Skill up on trading methods, TA, Tools, Processes, Goals, Planning

• Price-to-earnings ratios significantly above historical averages

• TABI model going Dark Orange

• Excessive market euphoria and speculation

• Unsustainable valuations in major sectors

• High levels of margin debt

• Drying up liquidity

• Financial Crisis on the Horizon or C19 Situation

Preparing for the Storm Break
After the storm has kicked the $hit out of the market, the clever ones have cash reserves and margin to be read to go to sea... eg Captain Dan... anyone know that reference? Anyhow...

• Maintain a prioritized list of quality assets to buy during downturns

• Set price alert levels for potential entry points - i have scores of LIMIT alerts going at any given time - watch ATR, LILO etc.

• Always have dry powder (cash) ready for opportunities at this stage I am 7.5% and going higher.

• Be prepared to go in with Leverage - have all thing set up - we call this  InvestAnswers Ready Position - have Level 3 options Authority etc more ont his later

• Review and update investment criteria and strategies

Remember: The goal isn't to time the market perfectly, but to use periods of market excess to take profits and stack cash and prepare for future opportunities, just as fishermen use stormy days to prepare for better sailing conditions. This is when the big catches are made or as I say -

BILLIONS ARE MADE IN THE BEAR 🐻

inspired by Rembrandt