Some Stock Market Analysts Are Decluttering Their Portfolio Like Marie Kondo

Jerome Powell's Fed policy is creating stock market clutter. Some asset strategies look like Marie Kondo's 'KonMari' method for tidying.
  • The ‘KonMari’ method for tidying a home could save investors a tidy sum.
  • A looming economic slowdown might trigger a drastic stock market correction. Wall Street will throw out any stock that doesn’t “spark joy.”
  • Maybe the NYSE should invite Marie Kondo to ring the opening bell. Some investors are clearing out the clutter before a recession does.

The stock market took a nosedive Friday, its fourth straight loss for the week. The Dow took a 250-point intra-day plunge. It closed the day 170 points lower. The broader S&P 500 Index and NASDAQ Composite wobbled throughout the week as well.

Wall Street is reckoning with overbought stocks, liquidity-pumped gains, and lingering recession threats. But you can sum up most of the financial market’s worst problems today with one word: Clutter. Who needs Jerome Powell? Marie Kondo can fix this.

Any of These Could Crash The Stock Market

Fears over the spreading coronavirus in China, a disconcerting sovereign debt bubble, and crushing consumer debt at record levels all threaten the last year’s gains.

Should stocks take a deeper plunge, you can check off four out of four boxes that preceded the worst stock market crash in history. Meanwhile recession risks mount.

A recent Deloitte survey found 97% of CFOs expect an economic downturn in 2020. A Conference Board survey found recession is the number one worry on CEOs’ minds.

And with quarterly earnings season set to continue over the next week, markets suddenly don’t seem so sure the $1 trillion NASDAQ rally since October makes any sense.

Time to KonMari Portfolios?

Marie Kondo’s world famous organizing method for combating clutter, “KonMari,” is essentially what some strategists are using to protect their portfolio.

Her system has done wonders for people living in messy, cluttered houses. It involves going through one’s belongings by category, one category at a time, and purging anything that doesn’t “spark joy.” If that sounds like a terrible way to pick stocks, bear with me.

In an interview Tuesday, global strategist David Rosenberg said the Federal Reserve’s “financial engineering” has cluttered investors’ books with indiscriminate buying:

Last year, was like, just throw a dart. Right now, it’s indiscriminate buying. Investing isn’t supposed to be like that. Investing isn’t supposed to be easy.

It’s true. In fact some wise guys at The Wall Street Journal literally did pick stocks by throwing darts at newspaper stock lists, and beat a lot of hedge funds that way.

Like Buffett, Marie Kondo Esteems Simplicity

But a cluttered portfolio with a random assortment of stocks might not do so well when the monetary environment shifts. Allianz Chief Economist Mohamed El-Erian said Friday that this “wonderful world of liquidity” won’t last forever.

There is an end at some stage.

Stock market bears can prepare by going KonMari on their portfolios, and picking securities that spark joy. That could be Index ETFs that spark joy for retirees that want to diversify.

It could be growth stocks that spark joy for investors looking for big returns from companies they’ve done their homework on. Or it could be value stocks for those seeking steady cash flow from a blue chip that’s having a rough time. Billionaire hedge fund manager Seth Klarman says it will be value investing’s moment again soon.

Disclaimer: The views expressed in this op-ed are solely those of the author and do not represent those of, nor should they be attributed to, CCN.com. The opinions in this article do not represent investment or trading advice from CCN.com.

Sam Bourgi edited this article for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor or find a factual, spelling, or grammar error, please contact us.

Published:
January 26, 2020 5:03 PM UTC
Posted in: MarketsOp-ed
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W. E. Messamore @thehuli

Markets Contributor for CCN living in Nashville, Tennessee. Bachelor of Business Administration from Belmont University in 2009 (majored in Entrepreneurship). Organized Senator Rand Paul's first and second online fundraisers in 2009. Roving editor for the Independent Voter Network since 2013. Email me | Link up with me on LinkedIn | My Website | Follow Me on Twitter (followed by: fmr Rep. Ron Paul (R-TX), Sen. Rand Paul (R-KY), fmr NM Gov. Gary Johnson, and Rep. Thomas Massie (R-KY))