Show Us Your Portfolio: Katie Stockton

[00:00:00] Welcome to excess returns where we focus on what works over the long term in the markets.

[00:00:04] Join us as we talk about the strategies and tactics that can help you become a better

[00:00:07] long term investor.

[00:00:08] Justin Carbon, now in Jack Forehand, are principles at the Lydia Capital Management?

[00:00:11] The opinions expressed in this podcast do not necessarily reflect the opinions of the

[00:00:13] ability of capital. No information on this podcast should be construed as investment advice.

[00:00:16] Securities discussed in the podcast may be holdings of clients at the Lydia Capital.

[00:00:19] Hi guys, this is Justin. In this episode, Jack and I sit down with Katie Stockton,

[00:00:23] the Fairly Strategies to talk about her personal approach to investing in some of your views on the things that we're going to talk about. We do this show us your portfolio episode where we talk to professionals like yourselves that kind of give our audience insights how they think about their own portfolios, how

[00:01:43] they think about comp is long-term. And this is something we actually sort of learned more recently. I joke that I wish I'd been more long-term in my focus a long time ago. You know, it's easy to become short-term as a technical analyst because you're really close to the markets, right? So you know, period, maybe a consolidation phase or something like that, you would have been well served by doing that. So, so we have learned as we've gone along at the way that long term investing is really key. I'm curious how often or much do you think about your retirement? I mean, you're building

[00:04:24] a business that fairly with your team and you think about it as it pertains to your lifestyle and it honestly stresses me out quite a bit. I think I'm probably not alone in that to think that there's just not enough, right? So it's definitely on my mind. I can't say I think about it every day,

[00:05:41] but certainly once a month I'm really checking in little bit different with it. I understand that because what I do definitely defines me. It's a constant because I have my own company too. It's constantly on my mind. I

[00:07:07] enjoy it. or by equity ETFs, I've really never got too deep into fixed income. But now, you know, once I'm sort of at the stage where I am say, you know what I have, I completely apply that to 100% of my personal portfolio. Sometimes they also say, you know, that's what I do during the day. I don't want to like, you know, focus on my personal portfolio. I kind of put it away in the Vanguard stuff and I just leave it there.

[00:09:41] Like, how do you think about that?

[00:09:42] A little bit of both depending on the environment. But I'm really very top down on how I think about things. When the S&P 500 is working, well, then most stocks are working too.

[00:11:04] And then vice versa, this is where the individual stocks, I think you really want to have the earnings trends and other factors and strong management

[00:12:22] teaming and governance on the side of that position. So there's a advisor to do the individual stock portfolio primarily. And then I'll have my own positions primarily in our ETF just because that's a whole portfolio. And then I'll supplement that with some smaller positions. Yeah, the financial advisor point is really important, because we see that a lot. People think that those of us that are in the business

[00:13:42] won't benefit from a financial advisor. But a which is more what I'd be focused on, but also financial planning. So an overall view of your whole net worth and the retirement prospects with that in mind. You mentioned your ETF and the allocation strategy behind it.

[00:15:01] Can you just talk a little bit about, because I think that plays into how you're doing things

[00:15:04] with your personal portfolio.

[00:15:05] Can you just talk a little year, the sector dispersion is so massive, you can have 60% spread in relative performance, or even more than that, from the biggest winning sector

[00:16:21] and the biggest losing sector every year.. So either you can do that through, let's say you owned it, you know, in video and you said, I just don't want to see it go back, blow it's 50 day moving average. Great. That is a way to manage risk, but it is actually pretty high maintenance to monitor that yourself in a portfolio. So rather we like a systematic approach where it's kind of doing it for us and

[00:17:43] doing it via, you know, sort rather a combination of fixed income and precious metals that got us to a place where we felt like we liked the outcome. And so we have short-term treasuries as an option, long-term treasuries and gold that

[00:19:00] we're able to invest in through low-priced ETFs.

[00:19:02] So those become our kind of defaults divided about a data basis. We have moving averages, of course, that are great. This sort of gauges of prevailing trends over different timeframes.

[00:20:20] We have the MACD indicator, which is a very common technical tool to discern momentum and

[00:20:26] sort of doing an ETF where as bonds end up being like a risk off type thing, you know, you're looking at some other asset class.

[00:21:40] And then when the momentum breaks down and those asset

[00:21:42] classes, you end up in bonds.

[00:21:43] Like, how well do you think technical analysis works on bonds?

[00:22:46] play there. And because of that, you obviously have to look at price and yield, and you have to have it within a broader economic context, and as sensitive with the macro trends are

[00:22:51] not just the technical trends. So I'd say just with Treasuries is one, there's just

[00:22:56] a little bit more to it. So it doesn't mean that technicals don't work, but are certainly

[00:23:02] enhanced by understanding the macro trends. When values are performing, it does tend to trickle into the sectors, right?

[00:24:23] Think about a value heavy sector like financial with technology stocks, right? Because that's where I'm going to get them. I'm able to generate more alpha that way. And I believe that they are the breakouts that we see in technology, they do tend to generate momentum. It's sort of like the darling of market environment, right? That's the hard part, right? Is to know, you know, you have to identify the prevailing top down influences and then make those informed decisions. How do you feel about international exposure? Do you invest internationally at all? I mean, that's been a big debate like in our world

[00:27:01] because in theory, international exposure should be great.

[00:27:04] But in the past 30 years, it's been kind of a catastrophe.

[00:27:07] You know, the ETF Navigator.

[00:28:21] We did that because we had, I'd say, most of our questions, if they weren't about a technology

[00:28:25] stock, were probably about an ETF. ETS and and throw them up against the spiders and just see which ones have the relative momentum to that are poised to outperform So so that's how I would say we we would approach it. You know international would fall into that kind of supplemental positioning Yeah, for those of us who have invested internationally in the past decade

[00:29:40] We probably wish we'd called you up and use some technicals

[00:29:42] It would have certainly been from the outcomes relative of the buying hold I do appreciate the rationale behind

[00:30:44] let the charts guide you as to what country is working right then and there. And then obviously, if you have an opinion from more of an economics perspective, then

[00:30:50] just use that as another filter.

[00:30:53] Just one more for me before I hand it back to Justin.

[00:30:54] We've talked about stocks.

[00:30:55] We've talked about bonds, commodities.

[00:30:57] Is there anything else like in the liquid portion of your portfolio that you do or is

[00:31:00] that pretty much cover it?

[00:31:01] No, I mean, you know, there's all

[00:32:20] these different lines and there's these little labels that are labeling like what the most crowded

[00:32:24] trade was. Well, all the way through that time, stay on the right side of that. And there are times at which I would say it becomes against your better judgment because it does feel crowded or it does feel like it's overextended. And we will kind of take our emotions out of that type of situation and say, okay, well,

[00:33:44] here's what's going to change that trend for us.

[00:33:47] So here's where we're going to be out of it. phases, some of those prolonged corrective phases. And then you just had to make sure that you're in your, these would be more from like a treating perspective. But with a long term trend, and you could narrow where you could actually sort of zoom out from something like that's that trend sensitive, like a 20 day, and just use something that's a longer term, right? And say, okay, well,

[00:35:03] I'm willing to watch this go against me, you know believe in a position. We are bullish and have been bullish in our immediate term for some time on the likes of Bitcoin and Ether. So I believe in having a small position, not even just because of the trend, but because of the diversification that an asset class at, well, sometimes is

[00:36:22] tied to equities, but other times it really run up Bitcoin ahead of that news, right? And in a way, Ether sort of suffered under that, even though it was going higher, was it was lagging for actually quite a long time. So maybe we'll see the relative performance shift

[00:37:40] a little bit.

[00:37:41] How do you think about the value of your business

[00:37:45] in your overall, I guess, net worth?

[00:37:47] Is that something you think about, research and the consulting. So I really am in it for that. And I can't say that I have a specific valuation in mind as it pertains to my overall sort of investments and things like that. But what I will say is I just like trends, right? So as a technician, it's most

[00:39:02] important to me that I feel like the trends are good, right? And then that gives me more good. But you know, growth trend is what we want to see. When I ask you one more and then get some of your thoughts on the market environment, what you're seeing under the surface. But this one is about kids and you're a mom. You have young children. Jack and I both have young children as well. And you know, we just like to ask and get perspective from

[00:40:21] different people as to how they view, you know, leaving some money to their

[00:40:25] children or how they do that. Like, I think, a trend towards young people, almost like having access to too much money, going to Starbucks, going to Sephora, spending a lot of money and not having that sort of personal finance knowledge yet.

[00:41:40] So I've been more focused there, I would leave them high and dry once their education is done. But, but I do want them of course to be self-sufficient. Yeah, it's funny on the Sephora thing, my, like, my daughter, I've had no nothing about Sephora. But the other day she was like making a cart like on her iPad, it's Sephora. And she's like, Oh, it's $300. And I was like, Wow, I had no idea you could spend that much money in Sephora.

[00:43:01] I mean, obviously she didn't get any of the stuff she was trying to get, but I had no

[00:43:04] idea.

[00:43:05] She's nine years old, but like girls these days, I guess, you know, Sephora is kind of a

[00:43:08] big thing. And that's where the shock came, right? It was, and it was, really she didn't have any negative intentions, of course, right? But just didn't think to look. So that's something we need to teach them. What are you, let's get into the market a little bit as we wrap up here. So what's, you know, give us a rundown of what's going on

[00:44:20] currently in the market, what you're seeing in the short

[00:44:22] and mid-term and maybe where the opportunities are

[00:44:25] as we sort of start 2024 here.

[00:45:25] for probably most of this year based on the implications of the breakouts that we've seen. So those breakouts occurred not only in the major indices in the US, but also in the bottom up work

[00:45:31] that we do, the sectors. You can see a lot of breakouts on the sector level. You can see,

[00:45:36] and by the way, that wasn't really the case even back in sort of middle of last year.

[00:45:41] We had sort of more narrow leadership as has been 500 consistently. So to see a couple of weeks that are have a lower bias, I actually think is quite healthy. So now we're in this mode that we expect a little bit more consolidation in your term,

[00:47:02] but rather than telling people to get hedged, we from it in your life. It's funny, Jack. I didn't know that. We'll have to talk more offline about that. Silver racing, it's something that I've done sort of for 20 years plus and I love it. And I see, but I see how these so-called syndicates, they can drop so much money on just one race, right?

[00:48:22] So I can see how, especially if they're serious

[00:48:25] and getting new sales and what have you. times not as much, but in travel, of course, has gotten so expensive, you know, really since post-COVID, I would say. So we've, you know, at times probably outlayed more than I personally should, right, on a trip that, you know, is two nights or three nights, right? So I think that's probably my hotspot, if is not having defined risk metrics. We always want to make sure that we know what we're risking. We want to obviously have unlimited upside. But obviously, if you're making an investment, you believe in that.

[00:51:01] You just really need to know what you're willing to risk on that position individually and

[00:51:05] then within the broader context of your portfolio. Talking about this, you know, different than what you talk about most of the time, but it's been excellent. I think our audience is going to learn a lot from this, so we really appreciate it. Thank you. Of course, Justin, thank you, Bo. Nice to see you. This is Justin again. Thanks so much for tuning into this episode of XS Returns. You can follow Jack on Twitter at At Practical Quant and follow me on Twitter at JJCarbono.