4/3/2023M UPTREND day 4, Which index is winning?

4/3/2023M  UPTREND day 4, Which index is winning?

THE MARKET’S MESSAGE:   Time to build positions in rising market!

Wow! Which of the major indexes rose the most from their March lows to the March 31 closes?  

As you see these 3 charts side by side, without calculating the rise for each one, you might think they rose about the same percent.  Please make you estimates before you go on…….. I’ll wait. And I will show the real percentage gains below (no peeking until you choose your answer.)

But before I reveal the answer to my challenge, let’s look at Monday’s results

I was surprised that the Nasdaq took a little dip while the S&P500 and DJIA rose. But the difference isn’t huge and, “Yes,”it is not unusual that any of the major indexes I follow is better than the others. Someone has to win the race each day.

I am not in the market for the short win.. I am looking for the big, fat long win.

So I remind you how those 3 major indexes have grown and contracted over the last 10 years. When you look at the chart below, note the scale is linear, not logarithmic You can see it in the scale on the right hand side. Each 50 dollar gain is the same vertical distance.  Yet a $50 gain on 200 is a 25%  gain. And a $50 gain on 400 is only a 12.5% gain. This is why a longer-term chart will use a logarithmic scale to accurately show the relative moves percentages.

So let’s go back to the three indexes comparison and show you their real gains:

The charts are accurate, but the percentages tell the truth. The Nasdaq usually rises and falls faster than the S&P500 and the DJIA.  

So when we know the market spends more time in uptrends,why would an investor want to invest in the DJIA or the S&P500?  There have been times when the S&P500 has outperformed the Nasdaq. But over the years, the Nasdaq wins hands down (or up!)

P.S.I wish I had the ability to create a long-term log-based comparison chart.  At least the MarketSmith weekly charts are logarithmic. Look down the right side where the index scale is shown and you will see the   They just don’t show multiple investments on one long-term chart.

>>>>> If you have access to a logarithmic, multi-investment comparison chart, please call me and let me know which system it is. Thank you!

At first glance you might think there isn’t much of a difference. But small differences grow over time. After the 5 years on the chart below, you would have earned 37.0% more with the QQQ than the Nasdaq.  Yes, I know….. you can’t actually invest in the 3000+ stock in the Nasdaq  But aren’t you glad you can’t?

One last comparison in tonight’s Armchair Investor newsletter:  Let’s compare the Nasdaq, S&P500 and DJIA over the last 5 years.  Even after the market correction last year, the Nasdaq is on top.  I have stacked there turns below, using the DJIA as 100.

NOTICE:  IF YOU LIVE NEAR FORT WORTH, JOIN ME THURSDAY April 6 for a  LIVE MEETUP at our favorite, OL’ SOUTH PANCAKE HOUSE.

·       BE SURE TO REGISTER ON THE MEETUP SITE. We will  

·       OL’S SOUTH HAS MADE A LEGITIMATE REQUEST, ALL ATTENDEES ORDER A MEAL. YOU CAN EAT IT THERE OR TAKE IT HOME.

ALERT---ALERT---ALERT.

>>>>>>Yikes!I just learned that the TRE is doing major construction and I may not be able to get back to Dallas Thursday night.  

‍If you know more about the TRE amended schedule, please call Charlotte and update her, (214) 995-6702.

 >>>>>If you live in fort worth and know about this question, please call Charlotte Tuesday and we will see if there is a workaround.

Thank you!

Charlotte Hudgin, (214) 995-6702

NEWSLETTER CONTINUES......

The ACCUMULATION/DISTRIBUTION table shows a strong sign of a recovery happening as the “As” & “Bs” count rose from 32% to 44% in just one week.

Are you registered on the current www.ArmchairInvestor.com site?

If so, you will receive a brief email from me after I post the newsletter each night so you will know, as soon as possible, when it is available for your review..  If you don’t get that message, just click on the popup invitation that appears when you go to the www.ArmchairInvestor.com website (the one listed above.)

Are you holding onto stocks that you like in spite of their weak chart action? Not me!  Cash is always a safe alternative. But note this recent broad rotation (past highly rated stocks being sold and underrated stocks being bought,)

>>>>>>>>>>>>> PLEASE READ THE FOLLOWING NOTE >>>>>  

A long time ago, (after paying for this lesson multiple times…..)  I finally learned two important messages:

1.    I am NOT smarter than the market. And,

2.    The market does not care about my “fine” opinion.

When I see the institutional investors selling hard (as shown by the drop of ”A” and “B” rated stocks, I am happy to step out of the market by selling my QQQ position.  

NOTE:  If you have individual stocks or ETFs that are holding up well, you certainly can hold them. But please keep a tight rein on them.

Remember: Stocks usually fall faster than they rise!

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Wishing you, “Many Happy Returns.”

CharlotteHudgin, The Armchair Investor,  (214)995-6702

www.ArmchairInvestor.com   (214)995-6702   editor@armchairinvestor.com  

2023 ACI NEWSLETTER sent via WEBFLOW

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