Better to put the ‘handbrake’ on the bag

If I have learned something during the last 25 years of my professional career in financial markets, it is that when ten strategies are opened and of the same five are winners and five are losers, something is wrong in the market.

When that happens, the ideal is to put the handbrake, which is why during the last two weeks I have been very reluctant to open new investment ideas to incorporate them into the Ecotrader list of recommendations.

Another reason why I am reluctant is because of the high exposure to the stock market that we have recommended today in the investment strategies portal of elEconomista, which is at levels of 75%, very close to the maximum limit that we handle of 80% , which I am not used to exceeding since I am very clear that most of the values ​​that we have in our monitoring table have a beta higher than the benchmark indices.

That beta measures ‘systematic’ or ‘market risk’. The more volatile a stock is relative to the market index, the greater its ‘market risk’.

With that exposure, they should be completely comfortable if stocks on both sides of the Atlantic continue to move upward, something that seems complicated if we look at the overbought and the potential bearish divergences that are beginning to be detected in many indicators and in the environment of correlations, which point more towards the possibility of seeing a consolidation in the near future than towards a context of greater increases.

This pause in the ascents does not have to be seen as a negative thing since, as I pointed out last week, if there is consolidation it is likely that we will have a Christmas rally. Otherwise, better fasten your seat belts since we could have a final stretch of the year of everything but calm.