The Mid-Year Mistake Threatening Your Retirement

[$1 Billion Buyout Would Unleash a 10X Moonshot for Ground-Floor Investors]( This company and its founders are in talks with some of the world’s biggest organizations about a series of potential contracts. A single contract from any one of these mega-cap giants could send this company’s mere $100 million valuation soaring, transforming it into a billion-dollar unicorn overnight. [Check out the full exposé here.](   The Mid-Year Mistake Threatening Your Retirement By Matthew Carr, Chief Trend Strategist, Tactical Trend Investor Hey Reader, If the market is essentially a handful of names – Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN), C3.ai (NYSE: AI), Meta (Nasdaq: META), Microsoft (Nasdaq: MSFT), and Nvidia (Nasdaq: NVDA) – boy, everything is going great! The returns speak for themselves: Meta is up 127% year to date… Nvidia has surged 171% in the first six months of 2023… C3.ai is still up more than 200% this year, even after its recent sharp pullback! With such stellar runs, it’s hard to imagine why anyone would be complaining. But the good times don’t stop there… In fact, over the last 60 trading days, the 50 largest stocks are up an average of 11.7%. Unfortunately, the market isn’t a handful of stocks. I know it so often seems like it, as every year we only focus on a select few (especially if they have a catchy acronym like FAANG, MAAN, and BANG). But across the various major U.S. indexes, there are thousands of names. And the issue right now is the disparity between the haves and have nots is starting to spark concern. So, today, we’re going to dive into how you can protect yourself – and still profit – no matter what happens next.   These are REAL results produced during the last decade-long commodities bull run. Based on three signals converging right now, Tom Gentile believes it’s happening again (and starting within 30 days). He put more than $1.5 million on the line… and he’s not stopping there. [Join Tom and Brien Lundin for their complete profit plan now.](   A Ship Poised to Capsize? “A rising tide lifts all ships.” That’s one of the tried-and-true adages of investing. But is it true? Because it sure doesn’t seem like it. The Dow Jones Industrial Average – the bluest of blue chips – is struggling to keep its head above water in 2023. The Russell 2000 – home to high-growth small caps – is fighting to do the same. And over the last two months of trading, the Dow and the Russell have been on very different trajectories than the Nasdaq and S&P 500… Below is a chart depicting the percent returns of the Dow, the Russell, the Nasdaq, and the S&P from March 7 to May 31… Tech stocks – propelled by aforementioned AI names like C3.ai, Meta, Microsoft, Nvidia, and others – scrambled more than 12% higher from March through May. The S&P, with many of those same names as the engine, rose 4%. On the flipside, the Dow is scrabbling for direction over the last 60 trading days, as the Russell 2000 plunged 7%. Digging further into the data, we see only 36% of S&P 500 components are trading above their 50-day moving average (DMA). And roughly 45% are trading above their 200-DMA. We’re in a top-heavy market. And that can be a dangerous one, as the ship can capsize. But the upshot is it gives us an opportunity to review the most basic – and most-often ignored – rules in investing… Position-sizing and rebalancing. Re-Balancing Act Top-heavy markets aren’t rare. Even less rare are top-heavy individual portfolios. In fact, I’d say those are more common than not. I’ve known plenty of investors who have scored big on a single name or asset over the years. But they all made the same mistake of allowing that huge win to become “golden handcuffs.” So much of their fortune and financial future is chained to this lone holding that they become paralyzed. They’re too afraid to sell because they might miss out on more upside. But the emotional toll of the day-to-day moves drains them. Unfortunately, many investors will then ride that position all the way back down to zero, or even a loss, before acting. Look, we all know the deal… each year, you’re going to have holdings that do well. Sometimes, as in the case with AI stocks, exceptionally well. The downside is your portfolio becomes top-heavy – just as with the markets in 2023 – and a few names drive all the growth. At the same time, they now make up an outsized weighting of your total assets. And that’s a very dangerous position to be in. For example, let’s say you started 2023 with a $100,000 portfolio invested in 10 companies… First, I’m an ardent believer in equal weighting. Each position in your portfolio should have the same dollar amount invested (not own the same number of shares). This creates balance. But not only that, it ensures one bad investment doesn’t usurp your financial independence. Now, this portfolio of 10 stocks has performed well, up 35% in the first six months of the year. But look what quickly unfolds… We started with each position representing 10% of the portfolio. Now, that equal weighting is no more. Very rapidly, Meta and Nvidia comprise nearly 36.5% of the entire portfolio’s value – a hair shy of $50,000! On top of that, the duo accounted for 83.4% of the portfolio’s gain year-to-date. Unfortunately, through the strength of their runs, we’re now wildly overweight these two stellar performers. And to preserve our sanity and protect ourselves, we must do what many investors believe is the unthinkable… Take some profits off the table on each. But we’re not just pocketing those profits. We are going to return balance to the portfolio by reinvesting them into each other position until they’re equal weight once again. So, in this example, we’d rebalance every position to roughly $13,500. This is something every investor should do once to twice per year in their long-term portfolios. Every six months, or at the end of the year, you trim the fat from your best performers and invest those gains in your laggards. This is a win-win strategy of taking profits and re-investing at lows. It also ensures your portfolio isn’t so top heavy that, if a top performer capsizes, all your gains are wiped out. Your tactical trend hunter, Matthew P.S. I’m excited to announce I’ll be speaking at the [Power of Passive Income Virtual Expo]( that runs from June 6-7 on MoneyShow’s virtual platform for accredited investors. I’ll share my latest views on recent market activity and the road ahead – as well as specific, actionable steps you can take to maximize profits and minimize risk. I will also be joined by dozens of other top analysts, money managers, strategists, authors, and professional traders, all of whom are eager to share real-time analysis, advice, and strategies with you. Plus, you’ll have the chance to ask questions directly to me and the other experts, not to mention fellow investors and traders from around the world. And you can visit interactive virtual booths featuring message boards, timely research, educational videos, exclusive discounts, prize drawings, and more! Simply [SIGN UP FREE HERE]( join me online when the event kicks off.   [Ex-CBOE Trader Eyes Upcoming $100K Trade]( An overlooked “Gamma Bomb” could detonate as soon as July 1st as three factors converge. The last time this happened, a $2B ETF lost 97% in minutes. [Click here to join Mark as he breaks down this once-in-a-lifetime opportunity to profit off historic volatility.]( You are receiving this e-mail at {EMAIL}, as part of your subscription to Inside Money Morning. 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