Humans have always been masters of adaptation. It’s the reason we’re still here — our ancestors learned to evolve, adjust, and survive while the other Homos couldn’t.
Sure, some people still act like Neanderthals, but it was our species’ ability to adapt together that kept us alive.
Today, as traders and investors, we face a similar test. The stakes aren’t life and death anymore — they’re financial survival. Adapt or go bankrupt.
Markets create similar evolutionary pressures our ancestors faced. Only now, instead of hunting for food or shelter, we’re hunting for the current market regime — and adjusting our strategies to thrive within it.
That’s where most investors fail. The inability to adapt is what separates the many losing portfolios from the few that survive and thrive.
Because let’s be honest — most investors out there still behave like Neanderthals. We see it every day.
But just like their namesake ancestors, they’ll eventually go extinct (go broke).
Our job, as rational and adaptive humans, is to profit from their mistakes.
It’s a massive advantage to not act like a Neanderthal.
Use it.
Rotation Rotation Rotation
In bull markets, everybody gets a turn. That’s why understanding rotation — and adapting to it — is so critical.
If you can’t recognize where the money’s moving, you’ll get stuck holding the wrong stocks, looking like one of those hard-headed Neanderthals we just talked about.
Remember how bad Healthcare looked for so long? It felt like the sector underperformed forever. And within it, Biotech was left for dead.
Now? Healthcare is one of the strongest groups in the market — and Biotech stocks are leading the charge.
Take a look at this three-month performance chart of U.S. indexes and sectors. I’ve included both the Equal-Weighted Biotech ETF (XBI) and the Market-Cap-Weighted Biotech ETF (IBB) so you can see just how strong this group has been — no matter how you slice it:
This is what sector rotation looks like.
This is what bull markets look like.
When Small-Cap Healthcare — especially Biotech — started working for us, we leaned in. We bought more. Then when it kept working, we bought even more.
That’s how we operate at TrendLabs: more of what’s working, less of what isn’t.
Notice how we only bought one bank stock? It didn’t work, we got stopped out, and now we don’t own any regional banks. Simple.
Meanwhile, my portfolio’s packed with Biotech winners — you’d think I had a lab coat hanging in my office. Those of you who know me well know that I’m the furthest thing from a scientist.
So the only question now is:
Who’s next?
Where’s the next rotation coming from — and how do we get there first?
Oil Refiners Hit New All-Time Highs
If everyone gets a turn, then eventually Energy’s turn will come too.
Here’s the Oil Refiners ETF (CRAK), which just finished October with its highest monthly close in history.
Below it, you’ll see the broader Energy Sector ETF (XLE) — similar setup, but still stuck at the same levels it was back in the summer of 2008.
If you’re not a Neanderthal, you can do the math — that’s more than 17 years ago.
That’s a long time to be stuck in the cave.
But I think their time is coming…
We started with one Oil & Gas name a few weeks back. Then we added two more last week. And by the looks of it, we’ll probably be adding again soon if they keep working.
That’s what adaptation looks like.
Do more of what’s working. Do less of what’s not.
It’s not complicated — it’s evolution.
The investors who survive are the ones who evolve with the market. The rest?
They go extinct.
Be a Homo sapien. Not a Neanderthal.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs