- The importance of rational position sizing…
- Should investors wait for a market pullback?
- Thank you for the well wishes…
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology. Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here.
As I promised yesterday, I’m going to share some data about mask usage around the world. I have heard many times the perception that the U.S. has not been compliant with the usage of masks, and that is the reason COVID-19 cases are so high.
But what’s really going on? What if we take a step back and take a global perspective on mask usage in public? How does the U.S. or U.K. compare to other countries?
Let’s have a look below:
I found this to be enlightening. The U.S. is right at 80%. The U.K. is around 75%. France is at just about 80%. And best-in-class country Taiwan appears around 85%.
And let’s look at Sweden, at the very bottom.
Less than 10% of people in Sweden wore masks throughout the entire pandemic, and yet the country’s COVID-19-related deaths have been less than 10 or sometimes zero a day since July… with essentially no mask wearing.
And check this out…
These numbers for the U.S. are confirmed by the Centers for Disease Control and Prevention (CDC).
In a July study released this year titled “Community and Close Contact Exposures Associated with COVID-19 Among Symptomatic Adults > 18 Years in 11 Outpatient Health Care Facilities,” patients who were symptomatic and confirmed to have COVID-19 were asked one simple question: “How often do you wear a mask when in public?”
I think that the data might surprise us.
70.6% responded that they “Always” wore a mask.
14.4% responded that they “Often” wore a mask.
In total, 85% of those who contracted COVID-19 and were symptomatic wore a mask in public “Always” or “Often.” Clearly, they are not effective at protecting us from contracting COVID-19.
And a piece of analysis titled “Non-occupational Uses of Respiratory Protection – What Public Health Organizations and Users Need to Know,” written by the CDC back in 2018, highlighted another piece of scientific research that I found.
It states that, “on average only 1% of the times that a surgical mask was put on resulted in adequate levels of protection. This is not surprising as loose-fitting facemasks and improvised devices are not designed to seal tightly to the face and thus cannot prevent particles in the air from bypassing the filter and being drawn into the respiratory tract during normal breathing.”
Even more unbelievable is that the research was performed on the surgical N95 masks, which are the most superior kind. Cloth masks, surgical masks, neck gaiters, and so forth are all inferior by far to N95 masks.
Perhaps unsurprisingly, this is well-researched ground. It is all evidence-based and very consistent. We’ve known about the efficacy, or lack thereof, for a long time.
So what the heck is going on?
Nothing but political theater. And it is happening at the cost of more lives, not less.
Sadly, children are the ones who are being disproportionately affected in a tragic way. That is even truer for those who are underprivileged and are not receiving an education while their schools are closed. They aren’t even receiving the one meal a day that they know they can count on.
This is so heartbreaking.
Either way, the U.S. elections are almost behind us. And the critically important research out of Denmark that I wrote about yesterday will be published or leak out one way or another.
We’ll all discover the results together here in The Bleeding Edge.
Have a fantastic weekend. Now let’s turn to our mailbag…
Thinking strategically about our positions…
Let’s begin with a question on position sizing…
Hi! I just joined last week, and I’m a first-time trader. I’m curious to know what you consider a small position size. I know it depends on how much money you have… Jeff did an example of $75 trades in his 5G demo, so is that what he means by a small position size? Also, a rational position size means what? I emailed my financial advisor and asked if $500 was a good rational position size for me, and he said yes… I’m trying to understand this new terminology as well as how to strategize.
Hi! Thanks for joining us and sending in this question. Position sizing is an important topic for all investors, and I’m always glad to see investors thinking strategically about it.
While I can’t give personal investment advice, I always encourage readers to use rational position sizing in any investments.
An overly simple explanation for rational position sizing is to never go “all in” on any single investment. In other words, we don’t want to be heavily overweighted in a single investment.
And you’re correct. The actual dollar amounts per position depend heavily on an individual investor’s personal situation.
The total amount of liquid assets available for investment, our desired allocation among different asset classes, the stage of our careers and lives that we are in, and our risk tolerance are all important factors to consider.
This is where the help of a good financial advisor comes into play. An advisor can help an individual investor step back and look at the complete picture and then recommend an overall asset allocation approach.
Another general recommendation that I can make is to build roughly the same position size across a portfolio of stocks in the same asset class.
For example, if someone is investing in early stage companies, investing roughly the same amount into each position is a smarter approach than trying to pick and choose only one or two winners and allocating all capital into just those two stocks.
No matter how well we think we know a company or a technology, there are always factors that are out of our control. We protect ourselves by not cherry-picking or going all in on one stock. That way, our portfolio will never experience a catastrophic loss.
By using rational position sizing, investors can diversify risk, ensure that they will have exposure to the really big winners, and drive higher portfolio returns.
And here’s another important point.
No matter how much an investor chooses to invest, percentage returns will be the same. And we can always choose to incrementally increase our position sizes as we realize our returns and grow our portfolios.
Should we try to time the market?
Next, a reader wants to know more about when to buy…
If a stock pulls back to your stated buy limit, should I buy it right away, or wait for the entire market to pull back, as you suggest it will?
– Jeff D.
Thanks for writing in, Jeff. This question comes up a lot. Obviously, in a perfect world, an investor could time both entry and exit points into every stock.
But I think we all know that is impossible to do.
The approach that I use in all of my investment recommendations is to establish clear buy-up-to recommendations. These recommended prices are determined through my analysis, and they represent good, and sometimes great, entry points to build positions in the recommended stock.
I determine my buy-up-to prices based on company valuations that I believe are reasonable at any given point in time.
Therefore, in general, if a stock drops into buy range, then that means it’s a “buy.” An investor is establishing a position at a compelling valuation with plenty of upside potential ahead.
I know that some subscribers have written in about how they have “legged” into positions.
In other words, they purchase half of a position size around the buy-up-to price, and then they purchase more shares in the event that the stock dips.
This can be a smart approach, and it depends on each person’s beliefs about the future direction of the markets.
I can’t give individualized investment advice, but I will say that it can be easy for us to overthink building a position. We can get caught trying to over-optimize our entry and exit points, and it can cause us to miss out on building a position in a great stock.
What I try to do is stack the deck in the favor of my subscribers by getting them into exciting investment opportunities… before the rest of the world figures out how great the companies are or how misunderstood they were.
In that way, we can capture consistently large gains that outpace the rest of the market and even the best hedge funds in the world.
Why prioritizing our health is so critical…
Let’s conclude with some notes from readers responding to my visit to Health Nucleus…
Jeff, thank you for sharing in depth your personal research so that your subscribers shall benefit from the knowledge gained by you. I have no doubt cancer doesn’t stand a chance with you and am very grateful that you included your readers in your personal story. I wish you happiness and wholeness in the many years to come. Blessings.
– Melissa W.
Dear Jeff, following your email on Friday subject headed “There Was a Dark Blob on the MRI Scan,” I wanted to wish you and your family all the best at this time. It’s evident that you could have kept your results private (and if you did that would be completely understandable). However, you instead had the courage to be open about your results, which in turn can benefit your readers, and for that I commend you and also wish to say thank you. I hope this email finds you well, Jeff, and although this is the first time I have written to you, I wish you all the best in a speedy and full recovery.
– Paul R.
Hello Jeff, I don’t have a question but just a wish for good health. We appreciate the sharing of your personal story and in particular, you mentioning the need to take control of your health. Doctors are conditioned to treat patients like we are monolithic beings and forget that we all have our own story. We wish you a strong and vibrant journey towards your complete recovery.
– Tim K.
Dear Jeff, thank you for sharing your very personal journey on Health Nucleus with us. This is just a note wishing you continued optimism, courage, and discipline in recovering and more power to your wonderful health habits. Thank you again for your professionalism, as I for one could identify no drop-off on your outstanding service. Very much appreciated and admirable.
– Yogesh M.
Dearest Jeff, I knew it from the moment you hinted that this “crazy” idea might have saved your life. Kudos on the dangling carrot… shame on you for having my wife and I worry all week!!! We were praying! Praise God on the timing.
You’ve opened my eyes to this topic on health. I’ve always been health conscious and a decent steward of the body God gave me. I am a lifetime member of all your services… Like you have stated, my family needs me. My two young girls need me, and your bleeding-edge info about Health Nucleus is priceless.
After all, what good is wealth in the financial spectrum without health! $20k isn’t a drop in the bucket in my world, but with my current investments and advisors (Brownstone), I intend to reinvest in my health and pay a visit to Health Nucleus after those catalysts that should be coming soon. Dearest Jeff, thank you. Thank you and may God continue to bless you and your family in these seasoned times!
– Nader I.
I really don’t know what to say other than a very sincere thank you for all of the heartfelt wishes that I received after writing about my experience at Health Nucleus. In all honesty, I struggled for a couple of months with the situation and whether or not to write about it.
But the experience was simply too valuable not to share. It is very easy for us to become numb to common knowledge like “eat well,” “exercise,” and “get good sleep.” It all tends to be very generic.
While some things are similar, each of our bodies are different. And if we really want to be healthy – healthy enough to keep a wicked disease like cancer away – we really need to understand our health and work to optimize it.
That is nearly impossible to do without the kind of comprehensive analysis and research that the team at Health Nucleus does.
And as I wrote last Friday, I am confident that I will have a positive outcome, and I feel even better now than before my diagnosis. I will continue to work hard on my diet, nutrition, and weight goals.
And I’m glad that so many readers were able to benefit from my experience at Health Nucleus. Whether readers are able to visit the Health Nucleus or become empowered with some of the information that I provided, that makes my trip and experience all worth it.
And I can now say from firsthand experience that there is incredible value in being proactive with our health instead of waiting until we are sick to seek treatment.
This is also why I am convinced that precision medicine is the health trend of the future. As investors, we need to make sure we’re exposed to this space. Those who want to position themselves for this shift can go right here to learn about my No. 1 large-cap precision medicine company to own today.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Thank you all again for the best wishes, and have a great weekend. I wish everyone the same good health that you were all kind enough to wish me.
Editor, The Bleeding Edge
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