It's frustrating that most etfs and mutual funds seem to be lockstep in correlation with broader markets, yet there is a class of stocks that are defying downturns and volatility. Maybe they will dive as I say this, but large downmarket consumer discretionary stocks have been doing great for many months selling pizza, burgers. cheap clothes etc:
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I hate to have to track and trade such stocks individually, yet there seems no good alternative. Available consumer discretionary funds carry along a bunch of mid market sluggards that kills overall returns. Same issue with high dividend yield funds - even with clever filters they seem to weight you down with obvious clunkers. Is there no alternative to messing with individual stocks in today's market conditions?
I was following various stock picker TV shows, because sometimes folks in the trenches weigh in on macro trends that you can target with funds. But now with most traditional macro categories gagging equally on the mediterranean diet, I started to take notice of stocks that defy gravity and infer weird macro stories that are driving them. Especially if their story inspires knee-jerk skepticism then the trend has room to gather future converts, so I'd try to rig a pseudo sector fund.
BTW, my examples weren't recent flashes in the pan; you can click on longer periods to see they steadily march upward. I guess it would be simpler to look at the 52 week high list of stocks and keep track of those that have had a steady rise based on graphs. Basically I am starting to infer macro trends bottom up rather than just analyze top down. I reckon traditional sector switching is too dominated and arbitraged by computer and hedge fund traders, so we may have to invent "morningstar categories" of our own to target.
Some example themes are go-downmarket consumer (when you might think only rich are spending), high dividend (in scary areas like finance and housing, but attaining capital growth), and sensible-but-unloved energy (like GLNG, handling nat gas). The go-downmarket run has been incredible with many more names than I noted, so maybe my sell discipline will be tested soon. I am trying a darwinian approach, where I clean out deadwood by enthusiasm of finding cash for the new. The process is made easier with an instant-on tablet handy that can spit out performance graphs a few seconds after any new idea.
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