Here Are The Biggest Concerns I Have Heading Into My Quarterly “Draft Day”

At, we announce the portfolio stocks for each of our 4 portfolios on February 19th, May 19th, August 19th and November 19th. We then hold those 10 equal-weighted stocks in each portfolio until it’s time to announce new stocks.

Well, it’s August 19th. It’s “Draft Day”. The greatest news of all is that, unlike pro sports drafts, we control all the picks. Every single one. We can pick the 10 best “players” to fill out our investing “squad”. Think about it. If you get the pick of the litter 10 times, shouldn’t you be able to build a stout portfolio? Well, that’s exactly what we’ve been doing at since we announced the establishment of our Model Portfolio in November 2018. Here’s a cumulative chart of our astounding results in just 21 months.

I remain extremely optimistic about the stock market’s performance the balance of 2020 and into 2021, but I do have concerns as I plan to fill out our portfolios tomorrow. Here are my Top 3 Concerns heading into tomorrow night’s draft:

Growth vs. Value

As earnings on many technology companies have exploded higher, it’s truly been a perfect storm as interest rates remain near historic lows. As someone who valued businesses for a living a couple decades ago, I realize the power of an accommodative Federal Reserve and a strengthening economy. I’ve honestly never seen an environment like this before. Throw out your Investing 101 handbook with historical PE ratios. It’s not relevant. Tell me the last time companies have grown their earnings by 30%, 40%, 50%, or more, and then discounted back future earnings using the lowest interest rates in history. It’s never happened before. We are in a melt up and growth stocks (IWF) have been crushing value stocks (IWD). Here’s the visual:

As we move forward, one question has to be…..”Can growth stocks continue to pummel value stocks?”

The Dollar

For the first time in 9 years, there’s reason to believe that this latest jump in materials stocks (XLB) might actually stick. I have avoided materials since the inception of our portfolios, along with real estate (XLRE), utilities (XLU), and energy (XLE), as their relative weakness has suggested to do so. But the XLB is now leading as can be seen in the following absolute and relative chart:

There’s honestly hope for materials. The uptrend was never in question. Materials has been going higher and I believe it’ll keep going higher. The real question is will materials show relative strength? That’s what I’m most interested in. I want to beat the S&P 500. Will materials give me a better opportunity to do that? Or do I stick with what’s been working best the past two years?


I see economic improvement in the months and years ahead. This will no doubt light a fire under transports ($TRAN) and we’re already seeing that:

The TRAN busted through the June high, but now the group has climbed within 3-4% of its 2020 high and roughly 6% of its all-time high. It’s also approaching a key relative resistance level. I really like the transports long-term, but is this the group to be in for the next 3 months? I don’t know at this moment.

Despite these questions and concerns, it’s time to draft 10 equal-weighted stocks in 4 different portfolios in an attempt to once beat the S&P 500 over the next 90 days. I’ll explain the decisions I’ve made and discuss the stocks in each portfolio at length on Wednesday, August 19th at 5:30pm ET. It’ll be a fun night and hopefully the start of another great quarter ahead. To join me at this “Top 10 Stocks” event, you simply need to be a no-cost 30-day trial member of You can CLICK HERE to join and get ready for a GREAT event!

Happy trading!