2/7/2016 A Time for Fear

Mouse	XLU	0.47%
Rabbit	Date	Return	Days
BT	8/11/2015	-3.00%	180
TM	8/12/2015	-14.43%	179
DY	10/30/2015	-27.43%	100
CVS	11/6/2015	-6.05%	93
TMK	11/23/2015	-12.53%	76
UPL	12/1/2015	-56.61%	68
NVR	12/16/2015	-4.44%	53
SPG	12/28/2015	-5.34%	41
FSLR	1/20/2016	5.82%	18
ROCK	1/25/2016	-4.64%	13
Turtle	Date	Return	Days
BT	8/11/2015	-3.00%	180
TM	8/12/2015	-14.43%	179
MMP	9/4/2015	-10.29%	156
DY	10/30/2015	-27.43%	100
CVS	11/6/2015	-6.05%	93
TMK	11/23/2015	-12.53%	76
CLF	11/30/2015	-20.69%	69
UPL	12/1/2015	-56.61%	68
GPRE	1/6/2016	-21.97%	32
OKE	1/20/2016	26.20%	18
	Since 5/31/2011	Annualized
S&P	39.76%	7.40%
Mouse	99.60%	15.88%
Rabbit	47.44%	8.63%
Turtle	51.97%	9.33%
	Previous	YTD
S&P	51.94%	-8.02%
Mouse	77.79%	12.27%
Rabbit	57.21%	-6.21%
Turtle	58.35%	-4.03%

After having endured a catastrophic 2015, the Mouse is off to a terrific start this year, with over 20% alpha in just over a month. Keep in mind, though, that this is just catch up. If we include 2015 we are behind, and if we include 2014 we are only slightly ahead. 2013 and further back and the model is running quite close to its long term regression line:

 

But what of the broad market?

Under the hood the breadth and volume have moved toward the mid-point of a typical bear market:

It’s at this point that folks start getting afraid.

The key to a bear market is to know that when all hope is lost, THEN you have hit the bottom. It’s counter-intuitive, until you think of a market as a market of buyers and sellers. When everyone with half a brain dumps their stocks in terror, then there is no more damage that fear can do, and the market stabilizes.

But we haven’t even seen that fear yet, so we have a ways to go.

The market goes up and down. The goal is to go down less and up more. But you’ll never avoid losses. Can’t be done, and anyone claiming it is selling rainbows and unicorns.

Fear is normal. Face it. Plan for it. And stick with that plan.

Tim