This December Market Panic Like Dec 2018 Panic EXCEPT for One Thing...
Hey Subscriber,
Take another deep breath...in...out...in...out.
I can always tell by our All-Access member texts --especially the particularly skittish members...when the market starts panic selling--I don't need a screen. But when our Ultra Growth stocks went from very green to red in about a nanosecond, I said to our Wealth Management trader TC "We got a US Omicron case across the wire didn't we?"
LOL--when I started on Wall Street, the "wire" was an actual teletype machine in a closet and the "screens" were Quotrons that were not real-time (I started on Wall Street at 13 :).
The real point I am trying to make here is simple: EVERYONE investor with a pulse should have been expecting a passenger coming in from South Africa and landing in the United States (and every other major country) to have an Omicron infected traveler land soon. Lost in all the hoopla and black box hedge fund momentum selling that happened today when the news hit "the tape" (now a millisecond feed into an algorithmic trading bot from Dow Jones Newswire) is the middle-aged guy actually infected was infected 2 weeks ago with very mild symptoms.
But here is the plan: 1) Nothing in our Secular Ultra Growth sectors and Digital Dominators has changed. Other than recent Salesforce weaker than expected guidance, our portfolio of APEX Digital Dominators barely moved--and Apple, Taiwan Semiconductor, Google, and Microsoft close UP for the day and the rest of 1-2% at most.
2) IF our ultra high yielding Ultra Income energy-transportation plays break their key 100 or 200-day moving averages (or more accurately the price of oil and natural gas fall below support) we will HEDGE that portfolio with AMZA and XOP/UNG put options just for protection from a wild card event out of nowhere.
3) Particularly in December, there is a LOT of selling that has nothing to do with a negative issue with a stock OTHER than normal year-end profit-taking and portfolio trimming and rebalancing (and tax loss harvesting).
4) Almost EVERYTHING and every sector that got hit the hardest were the serious momentum names...the 20-45-60X times' REVENUES SaaS high flyers or ZERO revenues "Disruptors" or unhedged oil and gas E&P stocks. With 35% of stock market volume today "robotic/automated/program" trading, the "MOMO" algorithmic trading
funds (who initially BOUGHT stocks at the open) barfed the same stocks up on a quick reversal on the "news."
5) LITERALLY Every WEAK first half of December in the last 20+ years means a strong December finish--call it the AFTER Santa Clause Rally or the Federal Reserve walk-ti-back mambo. Remember December 19th, 2018--newbie Jay Powell tells the markets "Fed rate hikes are on auto-pilot" and we have the biggest one-day drop after a Fed rate hike in history...and then on Jan 4th, 2019 we have one of the BIGGEST one-day rallies when he walked that statement back like a kid who said "he did NOT steal that cookie"
As I have shared for a while, the Fed could not keep up the Kabuki Theatre trope of "transitory inflation" when the stickiest inflation numbers come from wages, energy and consumer goods and service prices are running 6% (not to mention that "rent equivalent" inflation--what the Fed figures it would cost to rent the average $384,000 US home--will be up 20% in 2022 over 2021 starting in Q2 2022!).
Our Game Plan: The futures markets are green right now...1/2 percent or so when last checked--breathe deep and remain calm (or slightly intoxicated--these are the days and nights Gin and Bourbon were invented before).
Understand over 50% of the total stock market is at least 10% down already--yesterday New 52 Week Lows vs. Highs was 9.2X MORE LOWS than highs--it's no "stealth" correction. As I always mention, I have followed these ratio's for decades and they do NOT lie--they tell you when the market-cap-weighted indexes are being held up (in this case) by our AAPL MSFT Google Amazon Facebook Adobe Spotify CRM (until today) and they are last of the stock Mohicans and thus ripe for some correction, too.
Note: Literally Apple and Microsoft stocks are treated as a Wall Street/Hedge Fund/Mutual Fund money market account now--Google and Facebook to a lesser degree--simply because they have SO MUCH extra cash they could buy out their entire float of stock if they wanted (OK close.)
As mentioned, we have been patiently waiting to add our favorite secular growth sectors/themes NON-Mega Cap stocks for a correction as this 90% of the stock market below 50-day averages imbalance was not sustainable. We will publish our full Super Sectors and Super Sector Leaders list ASAP--my guess nobody is going to make much money in stocks until the Omicron unknowns are known (thankful for those giant dividends, right?).
Action Plan: 1) We need to get a 36+ VIX panic sell-off day with our beloved Mega Cap Apex technology companies i.e., market leadership getting hit too--that will be the sign of real capitulation. We got close today at 33 VIX.
Trust me: We will send out a "TIME TO BE BRAVE" email when appropriate.
You must remember in the simplest but most accurate description of how any live auction stock market works, the market bottoms when all they who HAVE TO SELL (margin calls) and those who can't take the brain damage of seeing their beloved stocks drop below their cost basis (aka "weak hands") have sold.
When margin call/weak hand sellers dry up, REAL professionals and wise civilian growth stock investors see bargain prices or key price supports held, and they scoop up what THEY determine to be high reward vs. risk stocks or ETFs and we roll along to the NEXT earnings season and see whether (in our case) our secular growth sectors and leaders Beat, Beat, Raise (beat revenues, beat EPS, raise guidance)
2) The biggest risk to the market right now is obviously there are too many known unknowns about Omicron:
A) will it replace the Delta variant and cause another surge within the 30% ish of Americans still unvaccinated and 70% percent with waning vaccinations they have not boosted yet and "breakthrough"
B) Will the Omicron symptoms be as reported mostly mild for unvaccinated/re-infected folks or similar/worse than the Delta variant
C) How will existing vaccines and booster shots stand up to the mutated Omicron variant
FACT: UNTIL we have quality believable data for the vast majority of self-directed investors and money managers who trust the data from CDC and the vaccines, you and I must expect some very jumpy days ahead for the stock markets on "bad Omicron news days(PS: I am leaving out the 30% of Americans who have come to the conclusion that they will never ever trust "the government, science, or virology scientists", that the "Mainstream Media" is just a cover-up conspiracy supporting the elite Deep State" and basically anything they don't hear on or read in their "Alternative Reality" conspiracy media bubbles is not factual--thankfully most of these folks by definition do not manage enough money to affect the overall stock markets--most don't trust Wall Stree either!)
For humanity's sake, I hope of course for the best Omicron outcomes obviously. But as a money manager, my FIRST job is to NOT LOSE my clients or your hard-earned wealth over 6-12 month periods (thankfully we have achieved that goal for at least two decades)
TR Wealth Management remains over 40% in cash or variable rate closed-end funds that benefit from higher longer-term rates) and 60% in our Global Apex Digital Dominators and our Ultra Income stocks/MLPs/ETFs.
Final Note: I manage money and publish stock buying and selling advisories for a living--I don't have the luxury or desire of living in an alternative reality. The reality I live and invest in is simple and uncomplicated: that putting my/your/clients money behind the most powerful transformational events, monetary policies, technological breakthroughs, and regulatory transformations are the best LEGAL ways to build wealth faster than any other way in history . . and at the same time identifying and avoiding the most powerfully negative regional or global events (war, runaway inflation, economic depressions, famine, pandemics, dictatorships, communism, religious fanaticism and now global warming) and investing fads or gimmicks.
Final note: The new Transformity Crypto Trader service we are working on addresses one of the biggest wealth-building transformations of 2022-2030 at least--the Web 3.0 blockchain technology with unambiguous and highly profitable use cases and value propositions is not SPAC Mania.
But Web 3.0 ALSO has ways to earn double-digit yields (readily convertible to $cash) simply by staking what we consider to be the highest value-added blockchain-based services.
So--have a cold libation on me, do not fear your wealth is going to evaporate overnight (asteroid hits excluded), and be ready to take advantage of the shearing of the FOMO/YOLO money lambs of which many are going to run to the sidelines when we get a REAL 5-10% meltdown---just like March 2020.
I hope we don't relive that again, but my point is you and I HAVE TO be mentally and financially prepared for the WORST outcome of Omicron and the next variant and the next variant. IF and when by 2023 we have enough people in the WORLD vaccinated and naturally immune, SARS Covid-19 will become "endemic" like the flu that knocked me on my ass last week--and the stock market is always looking ahead 6-12 months (while sometimes freaking out in the short run.)
Key Point: Until the known unknowns get plausible answers, YOU need to have enough cash or unused margin to take advantage of the inevitable dawn after the proverbial storm that is a continuing global pandemic, ok?
NOBODY needs to be a hero here--you DO need to be aware of actual reality, have a plan (reread the above if still unsure) and have the liquidity to take advantage of ALL the delayed spending on travel, services, and the transformation of our work lives, the coming metaverse, and lots of great emerging companies too.