Comfortably numb

We noted something interesting on a research conference call. Normally, a news headline dominates traditional and investment media sources. This headline usually involves a certain amount of fear reaction on stock markets, causing occasional pullbacks within an uptrend. As is said, the market climbs a wall of worry.

The commentator we were listening to noted that “10 years of news headlines all appeared within 10 weeks“.  I wrote down just a few of the current headlines that we’ve been bombarded with over the past two months:

  • COVID health scare statistics hitting us daily
  • Business shutdowns and recession. Record high unemployment.
  • Government spending like there’s no tomorrow. Fears of how it will be paid back, deflation/inflation talk.
  • The EU / USA trade talks
  • Election year noise…who’s winning, and how will that affect stocks?
  • Oil overproduction, then crash, followed by OPEC (Russia, Saudi Arabia) arguing over cuts.
  • May futures contract sells at negative $40 (you had to pay to get rid of it!) –  then a rapid rally back.
  • Stock market crash, rapid rally back
  • Lloyd protests and ANTIFA terrorism on the streets
  • China trade deal, Hong Kong democracy threatened
  • Brazil deep recession and political unrest, Italy potential debt defaults
  • USD declining, emerging market currency and debt worries

These headlines probably don’t cover them all. But here’s the strange part:

Markets rose without a single pullback since this onslaught of headlines started.

Technical trend analysts always face the same struggle:  Now I have to buy into a rising market! For momentum traders, this is their entire modus operandi. But for the rest of us, its a difficult ask. Ideally, we’d see some kind of medium-term pullback to work off signs of shorter-term speculation and overbought conditions. But markets aren’t obliged to accommodate our ideals.

So whats a poor lad or lassie to do?

We’ve legged a little of our cash back into the market. But we’re keeping lots of powder dry. And we’re focusing on value over growth stocks. I’ve mentioned this before. Like here. BTW–if you don’t already subscribe–be sure to get the latest newsletter by subscribing here. We discuss the sectors we are buying in search of value in the newsletter, which was emailed to subscribers today.

Today’s chart is simple. Below is the MSCI world index ex- USA. That chart shows us that the world markets ain’t doing quite as well as the USA.

But wait! As discussed here, even the USA ain’t doing so well without the 11-favorites. The rest of the world is paying attention to the headlines. So too are the other 489 stocks on the S&P 500.

Conclusion

Things are recovering, it seems. But the riches are not so wide spread. Perhaps investors are paying attention to the headlines. Except for those who have focused almost exclusively on the 11- stocks mentioned in my last blog. Those investors remain comfortably numb to the news.

We’re actually spotting opportunities out there in the stocks and sectors that others have ignored. Again, please feel free to subscribe to our newsletter for some specific ideas of our favorite picks. I’ll be back next week with a Bear-o-meter reading. Stay tuned.

 

 

4 Comments

  • Hi Keith:
    Wednesday the NYSE 10 day A/D went to 2.07 and it seldom ever goes above 2.0 but once over 2.0 has a flawless record of profitable investments. Jason Goepfert has many examples of similar indicators that have great future risk/reward. He also shows a few with poor rewards. Remarkably we have seen this all play out before multiple times. I say remarkably because neither you nor I have been in this business more than a few business cycles yet it is all so familiar. Tough call going in now but past experience dictates I do. I like to recall the comment someone once said, “Do what is most difficult to do not what is easiest.” (re: investing)

    Reply
  • Hello

    Buy any things in next 2 months,you will make money. simple like that.

    Reply

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