🧠 Smart Money Is Shifting—Here’s Where I’m Investing Now

Time to take profits on crypto and get defensive...

It's been a tough few weeks for investors.

At its lowest point, the S&P 500 was down -6% from its all-time high, erasing all gains since the post-Election Day rally.

But if you're holding tech stocks, it's been even tougher. The Magnificent 7 tech names are all well below their highs, dragging the Nasdaq down 9% from its February 18th peak. Even Nvidia's (NVDA) solid earnings report couldn’t snap the index out of its funk.

The market is clearly falling out of love with tech stocks, and with Trump's tariff roulette spinning daily, forecasting market moves has become a real challenge. One minute, we might get a headline about tariff relief and the market soars—the next, he could double down on Canada and Mexico with 50% tariffs, and it's back to the woodshed.

During times like this, the best strategy is to embrace the uncertainty and volatility. Tough times never last, but tough investors do. Market volatility is normal—what’s not normal is the two years of low-volatility, “up-only” markets we just experienced. This also isn’t my first rodeo with Trump’s tariff roulette. As the senior equity analyst at Mauldin Economics from 2016-2020, I navigated similar trade war turbulence—and came out ahead.

This experience will inform the portfolio changes today. My goal is to reflect this higher level of uncertainty in the near-term, while adding to some beaten down long-term positions. As after all, we are long-term investors who should welcome volatility rather than run from it.

That's especially true with the "sector rotation" I'm seeing right now.

A Sector Rotation Has Begin

There's an old investing adage that says, "rotation is the lifeblood of bull markets."

And right now, we're seeing a textbook example of this principle in action.

As the market cools on tech, capital isn't fleeing stocks altogether. If it were, the S&P 500 would be down much lower than 6% off its all-time high - an event that happens, on average, at least three times per year.

Instead, it's finding new homes in other sectors and regions. We're witnessing a robust rotation into U.S. financials and consumer staples, both of which are near all-time highs. One of our biggest positions - Berkshire Hathaway (BRK.B) - has been a beneficiary of this and is currently breaking out to new all-time highs:

Financials at all-time highs also tells us the market thinks the economy is doing well. That's because banks and financial institutions are closely tied to economic activity. The equal-weighted S&P 500 and Nasdaq, which gives each stock the same influence regardless of size, are also at all-time highs.

This is a clear sign that market strength isn't just coming from the biggest names. Instead, smaller and mid-cap stocks are pulling their weight, which is a hallmark of a healthy bull market. When a handful of stocks lead the market higher - like we had in 2023 - it can be a sign of fragility. But when gains are broad-based, it's an indicator of market stability and longevity.

And internationally, the story is just as encouraging.

Non-U.S. Stocks are Catching a Bid

International stocks have underperformed US stocks for decades. This is a key reason we rarely own them in the portfolio. But that trend may be starting to reverse.

For instance, the Global Dow is at record levels, European stocks (as measured by the STOXX index) are hitting all-time highs, and Chinese stocks are finally getting some love. Even Israeli stocks are climbing to new peaks.

This kind of global participation adds another layer of strength to the bull market. When stocks are rallying worldwide, it often points to a synchronized global expansion—a powerful tailwind for U.S. markets as well.

What we're seeing is what is known as "breadth expansion." This means that instead of just a few names driving gains, a wide array of stocks and sectors from all over the world are participating. It's like a relay race where the baton is being handed off smoothly from one runner to the next, keeping the momentum going.

If you're worried about tech stocks dragging down your portfolio, consider this: when capital rotates, it creates new opportunities. Instead of chasing the same old names, this could be a chance to take some profits and diversify into strong sectors and international markets that are showing leadership.

And that's exactly what we're going to do today.

Taking Profits on Crypto After a Great Run

At present, the TikStocks Portfolio looks as follows:

After the moves I'm about to make, this structure will look very different.

First, let's look at the crypto allocation. At the start of the bull run in late 2022, we had 6% of the portfolio allocated to crypto holdings like Bitcoin (BTC), Ethereum (ETH), and soon after Solana (SOL). We've added a few positions along the way, but 97% of the portfolio has been in these three positions during this bull run. And we've been bullish back since Bitcoin was trading at $27,000.

We captured a ton of upside. That's why the crypto portfolio grew from 6% of the TikStocks Portfolio to over 30% of the portfolio at the end of 2024. This netted me hundreds of thousands of dollar and millions for our members.

But as I've been saying since the Election Day rally, we are very clearly near the end of the cycle. Yes, there could be a blow off top as there is at the end of every crypto bull run. But that doesn't mean we can't take some profits now, especially since all "good news" (e.g. US Crypto Reserve, Bitcoin ETFs, etc.) have already been priced into the market.

Taking a Few Triple Digit Gains (Among Other Portfolio Changes)

The last two years, it made a lot of sense to run a higher-beta portfolio.

Now it makes sense to ring the cash register on a few positions - particularly in crypto where I've been saying for months we're late cycle - and beef up our defensive front (while adding to some quality longs). We also don't want to do the dreaded "round trip" on some of our big winners from the 2023/2024 run.

Thanks to a few of our stop losses getting triggered, we're also currently sitting on the most cash we've had in the portfolio in two years at 12% of our total portfolio. So we have plenty of dry powder to deploy.

This process started last week when we sold 50% of our position in Ethereum (ETH) for a modest gain. And we will continue that process today by selling 25% of my…