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Alfonso’s Daily Note

Let the Consumers Decide

January 2, 2025

When assessing risk appetite and the health of the market, several approaches come to mind. One of my favorites is comparing Consumer Discretionary stocks with their Consumer Staples counterparts.

Discretionary stocks represent products or services consumers spend their "extra" income on—like leisure activities, retail, and other non-essential goods.

In contrast, Staples are those companies whose products and services we continue purchasing regardless of economic conditions. These include essentials like toothpaste, laundry detergent, beer, soda, and cigarettes.

Historically, Staples outperform significantly when markets face pressure, which makes sense given their necessity-driven demand.

Alfonso’s Daily Note

10 Lessons I Learned in 2024

December 31, 2024

As 2024 comes to a close, I want to take a moment and share some of the most important lessons I learned this year.

Here are ten of them, in no particular order.

1. Skin in the Game: Don’t be afraid to trade—there are no excuses not to start. Today’s world offers countless platforms and opportunities with low barriers to entry. While this field demands a willingness to take risks, you don’t need to invest everything at once. If fear of loss is holding you back, begin with a small portion of your capital. Taking that first step is essential, as true learning only happens through action and experience.

2. Embrace Relative Strength: By identifying and buying the strongest performers in the market, you position yourself to capture alpha and ride the momentum of the true leaders.

Alfonso’s Daily Note

The Most Important Chart for 2025

December 30, 2024

With the year coming to a close, I want to share what I believe is the most important chart to consider as we head into 2025.

When it comes to the most critical stocks, it's all about tech. This has been the case for at least the last decade and a half.

Mega-cap tech not only dominates U.S. indexes, but these stocks also play a major role in most investors' portfolios.

The same is true for semiconductors, which serve as both a benchmark for the technology sector and a barometer for the broader market. They are also the posterchild of the ongoing AI revolution.

By evaluating relative trends, we gain insight into leadership and can also assess the market's overall health.

Take a look at the long-term view of Technology $XLK and Semiconductors $SOX relative to the S&P 500 $SPX.