Barring a Large Drawdown, I’ll Be Allocating Into Stocks on Friday

I know this doesn’t appeal to the knuckle-draggers who roam these halls. You’re more interested in which stocks are going to barrel-roll higher tomorrow. I’ve moved past picking stocks, a fucked up and high octane lifestyle which has infuriated me and kept me on this fucked up rollercoaster for most of my adult life.

Finally, I am committed to creating systematic models, via Exodus, that will grant me license to cavort sea-side this summer, drinking properly frapped champagne while my account fixes itself through quantitative greatness. Some of the old school types, especially active managers, scoff at machine learning — casting aspersions on data science because, well, they’re idiots and their livelihood depends on investors falling for the Fred Flintstone method of trading.

I am going to create something greater, move the discussion away from XYZ to a more macro picture. For those interested in great picks from a great investor, check out Jeff in After Hours with Option Addict.

According to my current model, which starts by pitting market caps against one another vs bonds/gold, I will be placing 80-90% of my assets in stocks on Friday. Only two things can disrupt this:

1. Bonds/Gold melt higher, far outperforming stocks.
2. Stocks collapse.

If stocks are chasing alpha again, I’ll be allocating into a model that places emphasis on companies with great free cash flow. Long story short, the combination of fundamentals that I created had resulted in the best returns over the past year.

Seasonality is a detriment this time of year, so I wouldn’t be surprised to see stocks flag for the next few days — as bonds and gold catch up.

We’ll see.