No Need to Rush – Do This Instead

Keith Fitz-Gerald Apr 03, 2020

Today I want to talk about something most investors misunderstand.

The need to move quickly during a crisis.

More people than you’d care to believe go off the proverbial rails because they do so without the benefit of long-term thinking and perspective.

That’s bad… not to mention very expensive when it comes to your money.

For instance, there were a lot of investors who tried to move quickly in late February because they wanted to “buy the dip”. Sadly, many are now nursing very expensive losses, or hanging onto terrible stocks that they should have jettisoned.

The far better and more profitable alternative would have been to use the Trailing Stops we talk about frequently to capture profits as the markets rolled over and specialized inverse funds like the Rydex Inverse S&P 500 Strategy Fund (RYURX) to tame the downside as it worsened.

Now there’s another problem on the horizon that’s going to be equally devastating… the prospect of a “melt-up.”

All the ingredients are there.

The government is pulling out all the stops, the kitchen sink, every tool in the toolbox and more to ensure a recovery.

And the markets are beginning to respond.

Believe it or not, roughly 10% of the S&P 500 is still above its 200-day moving average – the institutional bellwether used to determine buying or selling pressure.

More importantly, 89% of all S&P 500 companies just triggered a MACD crossover to the upside. That’s the highest number ever recorded, according to Bloomberg and @SentimentTrader, who deserves a tip of the hat for posting this chart earlier in the week.

So now what?

You’ve got a decision to make.

Time IS of the essence, just not in ignorance of the broader trends and information. You cannot hope to be a savvy investor if you put your head in the sand with a sign on your rear end saying “kick me when it’s over” – although, I’ll admit, that’s tempting.

Anyway, the coronavirus adds a level of complexity to market analysis but it does not change the Unstoppable Trends nor the longer-term impact of “must have” products and services on your portfolio.

Now IS the time to push the reset button.

Just stay focused on the right companies with a clear path to profits, plenty of cash on hand to weather the crisis, and a firm hand on risk management.

Every crisis is an opportunity in disguise, even this one.

I’ll be with you every step of the way.

Key Takeaways:

  1. Central banks and governments around the world are pulling out all the stops to get through this and the markets are starting to respond, albeit slowly and not immediately.
  2. 89% of all S&P 500 stocks made a positive “MACD Cross” this week which is the largest such reported move every recorded
  3. Savvy investors are already on the move which is why the next step is a (very scary) no brainer.


Keith

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