Ignore the Beleaguered Bears
Right now, some small, up-and-coming cryptos stand to offer Bitcoin-sized profit opportunities. Dr. Martin Weiss is planning to tell you all about them in a live Q&A session this coming Tuesday, Oct. 5 at 2 p.m. Sign up for that FREE event here.
Speaking of big potential, investors have one knocking on their door thanks to the recent pullback.
Wall Street and the media might lead you to believe that … slowly but surely … all the pieces for a nasty stock market decline are falling into place.
Weak economic growth in China? Check. Nagging inflationary pressure in energy and shipping costs? Check. Staggering political incompetence? Check. A September pullback of nearly 5% in the S&P? Check.
Bears are dancing because it looks like they may finally get the stock market crash they’ve been predicting since 2010.
• But it won’t happen.
One problem for bears — apart from the fact that they’ve been on the wrong side of the stock market for a decade — is seasonality. One nasty stock market in October 1987 aside, stocks usually start to go up coming out of September lows … beginning about now.
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The reason: Professional traders usually get considerable year-end inflows that they begin putting to work in October and November. Despite weakness for equities in September, there’s really no other place for that money to go.
Cash — when inflation is taken in account — has a negative yield. The same is true for bonds.
Meanwhile, stocks have come off nosebleed levels from a month ago. The S&P 500 lost 4.8% in September and is now at 4,327.49 as of writing.
Also, some of the factors currently driving stock prices lower will most likely abate soon.
Energy prices should stabilize. Natural gas — the current runaway market in the sector with prices trading at levels not seen since 2014 — is wildly extended and could pull back sharply.
Remember when lumber prices surged fourfold … only to fall all the way back as soon as supply came back online? The same should happen with natural gas.
The political morass should clear up, too.
Politicians are endlessly irresponsible, but nobody wants to be held accountable for defaulting on U.S. debt obligations. They’ll come together to raise the debt ceiling.
They can’t afford not to.
This will be a positive development for markets in the long run.
• In the interim, savvy investors should wait for a sign that markets have begun to reconcile.
My research suggests there’s tremendous opportunity ahead as the bigger themes of digital transformation bring better margins and more predictable revenue streams.
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Yet, there’s no good reason for investors to get too aggressive right now. It’ll be clear when traders realize the bad narratives have run too far.
In all this drama and consternation, it’s easy to forget we’re still only at the beginning of what is a decades-long revolution. Our economy is continually transforming and at a pace more rapid than perhaps ever seen before.
I often write about companies like Microsoft (MSFT, Rated “B”), Salesforce.com (NYSE: CRM, Rated “B-”), MongoDB (Nasdaq: MDB, Rated “D+”) and others. Although these companies have been expensive in the past, savvy investors would be wise to use this current pullback as a buying opportunity.
And there are others to keep an eye on.
So, don’t listen to the tech bears. There are still amazing opportunities in the market. These examples are just the tip of the iceberg when it comes to the overall trend.
You just need to be ready.
Jon D. Markman