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Mr. Market’s Split Personality: Can Sector-Driven Factors Help?
Mr. Market has been in a volatile mood since we last analyzed his mood swings and offered a potential solution based on Fundamental Momentum. Indeed, his volatility ruled the first quarter of 2018. The Fundamental Momentum indicator anticipated this well and provided warning signs as early as mid-February 2018.
But what can we do about Mr. Market’s split personality?
Some sectors are stable and calm while others are jumpy and nervous. The reasons may be fundamental in nature, or they may be due to singular events. The recent Facebook debacle is a prime example. One company’s tribulations affected the whole sector. Even advocates of fundamental analysis must admit that the governing fundamentals for each sector can vary considerably.
Read the article on the CFA Institute website : CFA Institute
Analyzing Mr. Market’s Sense Of Priority
“Management is doing things right; leadership is doing the right things.”
The legendary management consultant, educator, and author Peter Drucker helped coin this now well-known phrase. And since we all want to be investment leaders rather than mere investment managers, we should look for ways of doing the right things for our portfolios.
That’s where sector priority comes into play. Our crazy Mr. Market, with his mood swings and split personality, does have a sense of priority, though it’s often misunderstood. He favors different sectors at different times.
The question is: How do we decipher what Mr. Market’s priorities are at any given moment?
Read the article on the CFA Institute website : CFA Institute
