Show Us Your Portfolio: Katie Stockton

Episode Summary

Executive Summary: Katie Stockton describes a personal investing approach built around long-term discipline, technical analysis, and dynamic asset allocation. She prefers systematic risk management, uses ETFs for broad exposure, supplements with selective stocks, relies on an advisor for part of her portfolio, and is currently constructive on markets due to improved breadth and breakouts in Q4 2023.

Main Topics: Long-term investing over short-term noise (Priority: 5/5): Stockton says her own experience has taught her to focus less on daily market swings and more on long-term compounding, accepting drawdowns and avoiding unnecessary trading, costs, and taxes. How she allocates her personal portfolio (Priority: 5/5): She has moved from being mostly equity-focused to thinking more about diversified asset allocation, using a mix of equities, fixed income, commodities, and precious metals in a dynamic way rather than a static 60/40 split. Technical analysis as the core decision framework (Priority: 5/5): She uses moving averages, MACD, Ichimoku/cloud tools, momentum, overbought/oversold signals, and relative strength to guide both ETF and individual stock decisions, with trend and risk levels driving entries/exits. Role of ETFs and asset allocation in her strategy (Priority: 5/5): Her Fairlead Tactical Sector ETF is an ETF-of-ETFs that rotates among sectors and defensive assets monthly, aiming to capture leadership while avoiding major drawdowns through rules-based rebalancing. Advisor use, compliance, and portfolio structure (Priority: 4/5): She trusts a financial advisor to run part of her individual-stock portfolio, while she manages most of her own exposure through her ETF and smaller personal positions, partly because of compliance concerns and the value of outside perspective. Views on international, crypto, and thematic exposure (Priority: 4/5): She favors small, dynamic, ETF-based exposure to international markets and cryptocurrencies when trends support them, but keeps sizing modest because the U.S. has dominated long term and crypto can be volatile. Current market outlook and opportunities (Priority: 5/5): She is bullish on the market entering 2024 due to broad breakouts in price and breadth, strong sector participation, and improving global action, though she expects near-term consolidation before adding more risk.

Key Arguments: Long-term focus matters more than reacting to short-term market noise, because overtrading can increase transaction costs, taxes, and poor timing. Technical analysis is most useful when paired with a disciplined, systematic risk framework that defines when a trend has truly changed. Sector rotation and trend-following can add value because sector performance dispersion is large enough to matter significantly. Avoiding large drawdowns is central to outperforming over time; she believes this is often more important than stock picking alone. ETFs are an efficient wrapper for implementing tactical and thematic views because they are low-cost, tax-efficient, and diversified. Individual stock investing works best when charts, earnings trends, management quality, and strong relative strength align. A financial advisor can add value even for market professionals by providing research, planning, administration, and an outside perspective. International and crypto exposure can be worthwhile, but only as smaller, dynamic allocations guided by trends rather than hope or conviction alone. Her current bullish view is driven by both price breakouts and breadth improvement, which she sees as more meaningful than a narrow rally. Risk management should be built into the process through indicators, stops, or allocation shifts rather than left to emotion or discretion.

Data Points: Career length: 25+ years - Stockton says it took her more than 25 years to figure out her own investment approach as a technical analyst. ETF holdings: 14 ETFs - Her Fairlead Tactical Sector ETF holds 14 ETFs in total. Sector funds in ETF: 11 sector funds - She says 11 of the 14 ETFs are sector funds used for rotation. Monthly rebalancing: Monthly - The tactical ETF strategy rebalances once per month. Sector performance dispersion: 60% spread or more - She cites very wide annual performance differences between the best and worst sectors. Cash yield environment: 5% - She references money market funds paying about 5% last year. Suggested crypto allocation: 5% - She mentions the idea of having about 5% exposure to cryptocurrencies. Q4 market level: S&P 500 broke out above 4,600 - She identifies 4,600 as a major resistance level that was broken in Q4 2023. Breadth indicator: Advance-decline line reached a new high - She says market breadth confirmed the breakout with a new high in the A/D line. Timeframe for entries: 20-day and 50-day moving averages - She uses moving averages as practical levels to manage positions and reduce exposure. Assistant structure: Short-term treasuries, long-term treasuries, and gold - These are the default defensive asset classes in her ETF when sector requirements are not met. Children's spending example: $300 Sephora cart - She describes her daughter creating a $300 Sephora cart as an example of consumerism and money awareness issues among kids.

Pivotal Quotes: "I think the key is long-term." — Katie Stockton: She explains the core principle behind her investing philosophy and why she tries not to get caught up in daily market noise. "Avoid those big drawdowns." — Katie Stockton: She frames drawdown avoidance as central to outperforming over time, especially through systematic risk management. "I am bullish and I am bullish primarily because of the action that we saw in Q4." — Katie Stockton: She summarizes her market outlook entering 2024 and explains why price and breadth breakouts make her constructive.

Implications: Listeners should take away a disciplined, trend-aware framework: use rules, not emotion; keep risk defined; favor diversified and tax-efficient vehicles; and let breadth and relative strength confirm bullish exposure before adding risk.