Here Are My Thoughts On This Whole Mess…
Is your head swimming yet? There’s been so much information over the last few days related to Covid-19, the selloff, Congress, local officials, your neighborhood grocery store, and more.
Just two weeks ago, I spoke with six close personal friends and family within the span of 24 hours. All were aware that the market was tanking. They were all salivating at the prospect of getting in on various names.
Some got in at various points, others didn’t. But the selling only ensued further. Nobody is asking for my advice now.
For the ones who wanted to pull the trigger ten days ago, I pleaded with them. I told them this selloff is the real deal. It’s deep and it’s furious. And what it’s going to take for us to reach the bottom is for the individual investor to feel absolutely sick to their stomach. Like an addict, most of us will be writhing in pain, wanting to rid ourselves of stocks for good.
Some listened, others didn’t.
Now, is this a brutal way to think about things? You bet it is. But I’ve been in this business for a long time. I’ve seen this happen before.
The good news is fortunes are made in times like these. They’re what separates great investors from the crowd.
As my colleague Nathan Slaughter recently told his subscribers:
Already, market sentiment has perked up noticeably. We capped off a third straight day of powerful gains at the close of trading on Thursday. That doesn’t necessarily mean the worst is over. But we’re looking at once-in-a-generation valuations in some corners of the market.
When referring to current prices, investment-banking firm Jefferies said today’s investors were practically “stealing.”
So when the time is right, get ready for some thievery.
He’s not the only one who feels this way. Jimmy Butts, Chief Investment Strategist of Top Stock Advisor, recently shared this:
I have a hard time believing that the market is already over the plunge in oil prices, the growing number of cases of COVID-19, and all the economic damage that will come out of the sudden halt of our economy.
Millions of businesses have seen sales dry up, but they still have costs that they need to cover: rent, debt payments, salaries, etc. Hotels aren’t going to be able to turn back the clock and make up for folks not staying at their hotels, movie theaters can’t make up for lost Friday and Saturday nights, retailers and restaurants can’t make up for consumers staying at home. Airlines, casinos, salons, gyms… the list goes on…
My point is don’t rush… Don’t feel like you’ve missed the boat on getting in on the exact bottom. Nobody knows when the bottom is, and anybody who tells you otherwise, turn and run the other way.
I’m Going Shopping
Jimmy’s already told you about two of his favorite screaming values in this article. But as he pointed out, there are plenty of others out there. And he’s been curating a “coronavirus shopping list,” which he will send to his premium readers as soon as possible.
As for me, I started putting a little bit of cash to work on Tuesday morning. Am I too early? Honestly, I don’t know. Like Nathan and Jimmy both said, I don’t know if the market has bottomed or not.
If anything, as my colleague Amber Hestla just told her Maximum Income subscribers, investor sentiment just hasn’t dropped enough yet. What’s more, from a technical perspective, the market is probably completing a 38.2% retracement of the initial decline. That’s an important Fibonacci number that we’ve talked about before (and you can read about retracements here).
We’ll feature more of Amber’s thoughts in our regular coverage next week. The big question is whether stocks will do that and then continue surging higher? Or will they do that and then puke all over the proverbial carpet, like they did in the dot-com crash? My advice: Pray for the former, prepare for the latter.
It seems to me that right now the market is separating the sheep from the goats, so to speak. There are some incredible values out there right now – and it’s going to take some homework to determine what is a true value and what’s garbage.
I’m still developing my own shopping list for stocks. And once I’ve cleared my head a little bit, I’m going to work on it some more. I’ve spoken to every single one of our analysts, and they’re doing the same. (In fact, we’ve already published several of their ideas up to this point.) And I look forward to sharing what we’ve found with you very soon.
Get Your Mind Right
My significant other works in the mental health field. She says that the things we tell ourselves have a huge impact on how we act. It’s called inner dialogue. If you question this, think about the hordes of people buying up all the toilet paper in grocery stores a few days ago. If you were one of those people, I’m sorry, but that’s the approach of someone who is in a state of panic.
I think about this idea a lot whenever I’m in the gym. I can tell you for certain that once you approach 400 pounds loaded on a squat rack and start questioning in your head whether you can make the lift, you’re already toast. You might as well pack up and go home.
The reason I’m bringing all this up is because this is a time when you need to get your mind right.
So do me a favor and take a deep breath. Now, tell yourself it’s all going to be OK. Even if you don’t feel like it will be, just fake it til you make it. I’m not kidding.
The other thing she’s been telling me lately is that I need to shut down the information flow for at least 24 hours this weekend. I’ve learned that she’s much smarter than me, so I’m going to follow her advice.
The market will be there when I come back. So will the headlines about coronavirus, unfortunately. In the meantime, we’re going to continue with our regularly scheduled programming as much as possible: by making good meals, cleaning house, walking the dog, checking in on friends and relatives, getting some sunshine… (all while practicing appropriate social distancing, of course).
This all may sound trite, but take it seriously. Get ready to clear your head now, because you’re going to need it in the days and weeks to come.
In the meantime, send me an email. Let us know how you’re doing. How has all of this changed your situation? What do you have on your watchlist right now? Be well, stay safe, remain calm.
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