Dear Reader,
Folks have been reaching out to me, seeing the market’s ups and downs and asking, “is it time to buy yet?”
Here’s the deal:
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We came into this bear market with stocks at historically high levels - no doubt about that.
And in the third and fourth quarters last year, starting around August, September, October, we saw very sophisticated professional investors starting to unload stocks.
As we faced an upcoming election, we knew there would be a short-term party and a long-term fiscal problem with a new president rolling out policies that would seriously damage the economy in the long-term…
That more debt would send gold higher, and of course, that’s what we’re looking at today.
But in terms of actual day-to-day, week-to-week market action, selling among professional investors has picked up this year.
The Wall Street Journal recently reported hedge funds have sold a net trillion dollars’ worth of shares this year.
Vanguard reported 97% of their customers avoided trading altogether in early April…
But in the past two weeks, professional investors have continued selling, while retail investors have been buying - A LOT.
Goldman Sachs reported single stocks net buying hit $12 billion this month.
That’s not a sign of a market drop at all.
We could see this in one of my favorite stocks, META.
META’s been bouncing between $485 and $550…
It’ll float up and hit that top around $550 and come down to $485.
Then big buyers like me come in and we’re buying because we know it’s selling at a discount over time, and we create a floor.
So it floats back up.
And we’re seeing that with a lot of stocks.
This kind of floating action tells us they’re not being bought on heavy volume - it’s not institutional buying.
In a market like this, CAUTION is the watchword.
We have policies forcing companies to cut back on expansion plans because they don’t know what will happen…
If they were planning to build a plant in Mexico or Canada or Europe, as Dow Chemical said on their recent call, they’re going to hold back.
By holding back they are telegraphing they may not expect sales to keep the same pace they’ve seen.
Now, this was funny -
United Airlines issued two forecasts to investors.
They took a lot of heat for this.
They issued one forecast for a stable economy and another forecast for a recessionary economy.
They’re basically saying, “choose your own adventure. We don’t know what we’re going to get based on the policies and whether they’ll be reversed, etc.”
It’s the first time I’ve ever seen that. And I thought it was funny - cheeky.
But the bottom line here is, be careful. Don’t think the drama’s over and the party is on.
Remember: the #1 rule of investing is, “don’t lose money.”
The #2 rule of investing is, “remember rule #1.”
As we get close to retirement age or are in retirement we have to protect what we have.
We also owe it to ourselves to be opportunistic.
This could become one of the special times in history where stocks really crack and you get an opportunity to buy cheap that rarely happens.
So you want to be “loaded for bear” as my friend always says.
We’re playing chess here, not checkers.
Focus on the long game.
I’ve been updating my Takeover Targets subscribers every week with the actions to take.
Takeover Targets is my all-weather investment research service.
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