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ELITES UNLOADING STOCKS: Don’t Fall PREY!
President Trump just gave a 75-minute speech at the New York Economic Club. He talked about the administration’s achievements in the fields of unemployment, tax cuts, deregulation, energy deals, trade deals and many other topics.
You can check it out HERE.
He also mentioned and celebrated the stock market’s gains since he came into office. The indices are all up, outpacing the rest of the world and that is, of course, benefitting not only the wealthy, but also 401-Ks, pension funds and college funds, all of which touch the middle class as well.
Despite these, many not only state that their personal situation hasn’t improved under Trump’s governance, but that it has worsened.
Americans, therefore, are divided on both economic and political issues; the country’s opinions are radicalized to the left and to the right, with the center shrinking. This is not a good sign, but it has happened on many occasions in the past.
In the meantime, though, the most seasoned investors are NOT taking any unnecessary chances. Not only are they holding onto exceedingly high cash levels (Warren Buffett being the biggest of them all), but they are also expecting 2020 to be TUMULTUOUS.
They’ve made big money in the past 10 years. Since corporations KEEP buying back shares in record amounts, the markets head into all-time highs, even without a rush of buyers.
Take a look:
This is a vital point to remember. Many funds and plenty of millionaires and billionaires are still LONG, but are not willing to risk any more funds than the ones already invested.
They also don’t want to hold too much cash, since clients will ask for redemptions, so they’re being forced to invest, even though they may not want to.
For these reasons, whenever the next correction occurs, as it did in December 2018, I expect it to be just as brutal and just as swift.
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I’ve placed LIMIT orders on companies that I want to be buying on the cheap — in the event these low-ball offers get filled, I’ll publish time-sensitive alerts on each of them.
On Tuesday, I outlined 2 of my 11 bear market strategies for mitigating risks. Today, I want to continue and plant two new ones in your mind to consider, as you patiently and wisely manage the speculative portion of your portfolio.
Again, all 11 strategies are included HERE.
- Active Investing: In many instances, stocks of small-cap companies, such as mining stocks or cannabis stocks, go up or DOWN by tens of percent, without any apparent fundamental reason.
When these instances occur, speculators must be proactive and figure out why. Many times, since these stocks only trade 10-30 times a day, which is common in the industry and EXTREMELY illiquid, just one seller could tilt the balance and create a panic. The same can happen on the upside as well.
This is the reason that a part-time investor must only own 5-10 speculative positions, if any, and to have no more than 1% of his wealth tied up in each. This gives him the ability to inquire as to what is causing severe declines or major rallies and REACT accordingly.
Many decide to call the company’s management and ask if they know what’s going on. Others research the matter online. Remember, as a shareholder, you are an OWNER of the business and must treat yourself as such.
Don’t stay in the dark!
- Shorting The Underlying Commodity: This is more advanced, but one way to hedge a bullish outlook on a small-cap company is to short the commodity itself. That way if the timing of the trade is wrong and you bought a position in a volatile mining stock, and a week later it is down 20% because gold corrected, you’ve made back some of the paper loss by shorting gold through ETFs.
Brilliant investors do that quite often; BUY a certain gold stock at the same time as shorting the sector.
When the tens of billions of dollars, which are currently sitting in cash see evidence of inflation, a tiny portion of it will go into mining – it’s just the way cycles work. When this happens, these stocks go up wildly and you’ll have to be ON TOP OF THINGS and take profits.
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