Told my subscribers to let go of $ELY for an 11% loss. But we bought a minimal number of shares through use of risk-management formula, and the portfolio is only minimally invested anyway because of the ongoing bear market - so damage to portfolio is negligible.

That's what risk management is all about.

It gets old to keep saying to yourself (and to subs) "Cut your losses quickly, let your winners run"...especially in a market headed more or less straight down. But I've learned from experience that really is about 2/3rds of the success equation in the stock market.

We never know exactly where a market bottoms or puts in a tradeable rebound. But the smaller the hole you dig for yourself, the faster the recovery in your portfolio equity chart when it happens.

If you don't control your losses, you won't have any confidence.

If you don't have confidence, you don't trade or invest.

If you don't trade or invest, you won't be in a position to benefit when the real market rebound starts.

In a note to subscribers last week, I said I'm adding the air-conditioning manufacturer Carrier Global $CARR to the portfolio.

The stock's already fallen from nearly $60, so I'm betting that the stock is more or less done falling. But if the shares fall below $34, we'll reconsider the position - or perhaps average down. At $34, the current share purchase would equal a loss of around 1% to the value of the portfolio - i.e. keep your losses small, let your winners run.

The stock has shown exceptional strength lately, staying even despite the general downward market volatility in the first half of May.

$CARR is a pioneer in air-conditioning from its earliest years. But the firm only had its IPO in early 2020 after being spun off from its longtime corporate parent United Technologies.

If anyone wanted to buy a stock that's likely to benefit from the tragedy and trend of global climate change - this is it.

A good example is in NYC, where the local power company warned consumers that their electric bills would likely rise by 12% on a monthly basis - hotter temperatures are causing more people to install window/portable a/c units.

Likewise, in places like India (where the company manufactures under its subsidiary Carrier Midea India)...the country is undergoing a record breaking heat wave in May. The electricity grid is strained to the max because people are buying a/c units to deal with literally life-threatening extreme heat temperatures.

$CARR is no rocket ship - more like slow and steady, with consistent rising demand. You can buy a new A/C unit, but eventually it's going to need new parts, a shot of freon, etc - so this is a high cash flow sort of business.

$CARR is on track to $2.29 a share this year, $2.58 a share next year, and $2.89 in 2024. Analysts have started to raise profit estimates recently (notice the upticks in the blue and orange lines in the chart below) after the company reported strong quarterly results recently.

As the chart below shows. analysts have begun raising profit estimates for $CARR for 2022 (the blue line) and notably for 2024 (the orange line).

The current valuation - a price/earnings ratio of 17 - is about as cheap as its been since the company held its IPO in 2020.

And we all know we can't do without our air-conditioners. The parts wear out. Every decade or two, we have to upgrade the whole system to more efficient models.

Not a bad business model to have.

Jeff

As noted to subscribers in recent days...$ELY announced better than expected quarterly results. Stock is down 50% in past year.

The Top Golf acquisition (completed in March 2020, just as the pandemic set in) should finally start to pay off. Company is noting increased 'corporate outing' activity at Top Golf and raised estimates for 2022.

Analysts expect profits of $0.66 this year, $0.88 next year, and $1.22 in 2024. Let's not forget that these estimates still largely reflect the depressed business activity of the pandemic.

I'm also encouraged by $ELY insider buys. The CEO and CFO made large purchases in December at $25, then even bigger buys in March at $21.

Risk control is always important. We should always know at what price we'll get out of an investment or trade if it's not going our way. I show subscribers a specific formula to make sure we don't take on too much risk, relative to size of portfolio.

Didn't realize I could post charts! Completely overlooked the tools interface. Here's my view of Nasdaq 100 (or QQQ etf ). Where fundamentals may not provide answers, sometimes technical analysis provides a few potential hints:

As I've been noting on Twitter for a while...expect more weakness ahead. Not all straight down. More like "dribble down". Been telling my subscribers when I see the odds turning higher for a sustained rally - basically near the end of the quarter.

But different stocks bottom at different times. We can't forget that. So it's important to note stocks showing strength, insider buys, and other evidence of a stock that wants to turn from lower to higher.

"Keep your losses small, let your winners run."