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Want To Be More Like Big Money? Easy.
by Alex King, CEO, Cestrian Capital Research, Inc.
Very easy in fact. Now, Big Money likes to keep most of its money for itself, but because in order to become Very Big Money, most of the companies that now form the larger holdings in the SPDR Financial Sector ETF ( XLF 0.00%↑ ) had to go public at one time or another. They continue to compensate their executive teams with public stock in addition to the alphabet soup of other stuff they get paid (oh and aside from the fat basic salaries paid in cash - that’s just walking-around money though - the real money is never paid in cash). And what that means is that if you - whether you be an individual investor or a fund manager - want to be More Like Big Money And Less Like Chad, then one way to do it is to own the stocks issued by Big Money, Inc. And XLF 0.00%↑ is a fine way to do that.
Let’s take a look at its top holdings.
That is the backbone of the American financial system right there. Now, if you are to believe a bunch of Twitter accounts that have a curiously large number of followers despite only appearing recently and not appearing to post much of interest, you could be persuaded that It’s All Over For America and indeed Capitalism In General and therefore you should SELL EVERYTHING before the MARKET CRASH HAPPENS.
Well, corrections do happens, big ones sometimes, as happened in 2009 and in 2020 and 2022, but in general you can count on American Big Money LLP to fight its way back to the top. Amongst the individual stocks above, we own BlackRock, Inc ( BLK 0.00%↑ ) in staff personal accounts and we can tell you that rarely have we seen a better long-term stock performance. It is in fact that most Dave Portnoy of things, the Stock That Only Goes Up. (We cover BlackRock in our Inner Circle service by the way - our most recent note on the name is here). We own BAC 0.00%↑ too, bought when the stock had been forgotten when tech started rallying in 2023, and we’re bullish on the name.
Here at Cestrian Market Insight though our focus is on using ETFs to abstract oneself from the vicissitudes of individual stocks. ETFs give you a cushion from single-name earnings shocks and the like, and if sometimes that means you miss out on single-name moonshots, oftentimes that moon landing can feed back into the right ETF anyway. If you didn’t invest in NVDA 0.00%↑ before it launched, but you hold QQQ 0.00%↑ or, more aggressively, TQQQ 0.00%↑ , then you’ve participated nicely in Nvidia’s gains without having to sweat so much about what if the stock falls back to Earth, etc. In staff personal accounts we’re happy to own both single-name and ETF positions, we don’t see it as an either-or question, just a risk management question.
The first sector ETF we’re going to cover in our upgraded Market Insight service is $XLF. So, for our Premium and Pro-Tier subscribers, here goes. (Want to join them? You can sign up right from this note - see below - and any problems at all, contact us here and we’ll help you out).