The Herd Buys at Last
In 2009, when I was recommending gold stocks that were trading below the amount of money they had in the bank, no one wanted to buy. These stocks went up more than 3,000%.
Here we are eight years later, and finally your neighbors are dumping money into stocks. In the United States, equity funds brought in their largest inflows in six months.
Reuters recently said that $7.5 billion flowed into stock funds during the last week of October. Investors are buying tech stocks like Amazon, Microsoft, and Google, and with good reason, as they all reported blockbuster earnings on the back of cloud computing.
They are also buying the market cyclicals like Caterpillar, the railroads, and chemical companies.
I created Bubble and Bust Report to keep you informed on the ways to invest in an inherently corrupt market where money printing distorts returns and obfuscates price discovery.
How can an investor determine at what price you should buy or sell when it is impossible to determine what a dollar is worth in an era of $20 trillion debt and endless buybacks?
But here we are.
The market has finally caught a gear and is lurching forward. We’ve had seven quarters in a row where the S&P 500 has gone up.
This is absolutely amazing, and well past the average of three to five. The market is overdue for a correction. And we will get one… the only question is when.
Most of us are old enough to remember the crashes of 2000 and 2008. Stock markets go up and down. But as the saying goes, they go up using the stairs and come down on the elevator. In fact, as you can see by the chart, they have a tendency to lose half their value about once a decade.
If you showed a five-year-old the chart above and asked him when to buy and when to sell, he would say buy the dips and sell the tops.
But adults think they know better. They are finally buying stocks now after eight years of a ramp-up.
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It’s the herd mentality. Stocks have been hitting records for months. People are finally talking about their winners again, and others think they are late to the party.
But we know, dear reader, that what goes up must come down.
You need to be prepared for a market correction. You need to have a plan so that when the market does fall, you won’t be holding the bag. When your neighbors stop talking about their massive gains in Amazon and Netflix and start talking about their rose bushes, you will silently be making money. While they panic, you will rest assured, smug in your safe harbor.
It will happen. The Wall Street Journal will lead with “The Biggest Point Drop on Record”… the nightly news will show fat brokers sweating and looking shocked while a big red arrow slashes down through the indices.
Some will say sell, some will say buy.
But you will know what is happening. You will have already formulated a plan. When they panic, you will stand fast.
That’s why I’ve developed a bulletproof stock portfolio for investors like you. These are investments in assets like rhodium and farmland that are not correlated with the broader market indexes.
I invite you to join us now. Before the great sell-off.
All the best,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
