Editor’s Note: As Chief Investment Strategist of Total Wealth, Shah believes in making his track record of recommendations easily accessible to all readers within seconds – and that’s why he’s compiled an Archives page.
Everyone Has a Plan Until They Get Punched in the Mouth: What You Need to Do When the Fed Realizes It’s in Trouble
Just because the master manipulators at the Federal Reserve say they’re going to backstop U.S. bond markets, as well as debt on corporate balance sheets, doesn’t mean they can.
It’s true they’re managing easily enough in the early rounds of the fight to save debt markets, corporations, and the economy, but they’re going to have to do more, including the impossible, when their real opponent comes out swinging.
As Mike Tyson famously said of Evander Holyfield’s fight tactics to beat him in their first bout, “Everyone has a plan until they get punched in the mouth.”
It’s never happened before. It’s totally unprecedented. A mere handful of stocks, six to be precise, are driving equity markets to higher all-time highs.
And it’s happening while COVID-19 still threatens the country and the economy, while the country’s struggling to climb out of the worst, deepest recession in history, and while 15 million of the 20 million Americans that lost their jobs since March remain unemployed.
However, none of that matters to the stocks powering markets higher, or the investors and analysts who say they’re going higher because they’ve benefited from lockdowns. They’ll continue to benefit from paradigm shifts in how we live, work, and play.
The narratives surrounding these companies and their stocks are all one-sided; they’re all positive.
The problem with that is, that positivity has turned to irrational exuberance – or, misled over-positivity. And that’s dangerous.
Sep 02, 2020
December 1996 is when the term “irrational exuberance” was coined, and the market’s are looking a lot like they did in 1996, especially in the tech sector. But it wasn’t until 2000 that the markets headed back down, so we have time to pull profits…
Don’t get me wrong – just because I’ve started to write about how crazy the market’s become, how it’s like déjà vu all over again, doesn’t mean I’m not bullish.
Because I am – bullish, that is.
Because, you know, it’s all good until it isn’t.
Because, “as long as the music is playing, you’ve got to get up and dance.” That’s what Chuck Prince, Citigroup’s chief executive in July 2007, told the Financial Times. The party would end at some point, but there was so much liquidity it wouldn’t be the U.S. subprime mortgage market stopping the music.
It took another 15 months for Prince’s preamble prediction which was, “When the music stops, in terms of liquidity, things will be complicated,” to come true, at least that part. The part about subprime mortgages not being the cause was just a little off. Just a little.
Does that mean we have another 15 months? Maybe.
The Dow was up 723 points last week, or 2.6%. It’s now 3.2% from its all-time highs of last February. The S&P 500 notched another all-time high last week, ending the week up 3.3%. And the Nasdaq Composite hit a record high, ending the week up 3.4%.
Since the March 23, 2020 lows, in only five months, the Dow is up 54.11%, the S&P 500 is up 56.78%, and the Nasdaq Composite, wait for it…is up 70.47%
Aug 31, 2020
Tesla’s market cap is greater than all the car manufacturers in the world, combined, and that’s a little lofty – but the FAANGs are headed higher, and those are the stocks – not TSLA – that are driving the markets up.
Aug 28, 2020
In Wednesday’s Total Wealth,I explained how there is no comparison between the 1999 rally that led to the Tech Wreck of 2000 and the 2020 rally that’s getting ever more irrational.
Of course, there are valid comparisons.
Don’t worry, be happy.
The roaring tech rally of 2020, courtesy of the Great Lockdown, courtesy of COVID-19, is nothing like the roaring tech rally of 1999 that led to the Tech Wreck of 2000.
At least that’s the investing narrative making the rounds now.
The story is, everywhere comparisons are being made between the irrational exuberance that led to the Nasdaq Composite crashing 50% in 2000 and the tech rally of 2020 where five stocks have led millions of investors up the yellow brick road, is that there is no comparison.
Aug 26, 2020
We’re coming out of this recession so far, so good, and if we get a vaccine, the economy, stocks, jobs, will all explode. And the market reflects that.
Ever wish for an “endless summer?”
Of course, you have.
Ever wish for an endless stock market rally?
Of course, you have.
Well, at least one of your wishes has come true.
Now here we are again, facing the end of summer and wondering how many more days, weeks, months, quarters, years, decades the market’s going keep on rallying.
I’ll save you the wondering, the answer is the market’s going to keep on rallying. Until that is, one, or two, or three things happen, either by themselves, but more likely, in conjunction with one another.
Aug 24, 2020
The overall market, the big names, the FAANGs, have been carrying the market higher as little names are still falling. Can they keep the markets up long term? Here’s what Shah says…
The polls and the pundits had it all wrong in 2016. They said Donald Trump had no chance of winning the election, and if he did, the stock market would crash.
So much for polls and pundits.
With Joe Biden now ahead in almost every poll, investors are wondering if stocks will keep rising if President Trump wins reelection.
The short answer is, “yes,” markets will rally.
Just when you thought you knew what to expect in a “Convention” to nominate a party’s presidential candidate, along comes Alexandria Ocasio-Cortez (aka AOC) and says what almost no one expected her to say at the virtual 2020 Democratic National Convention.
In her 90-second speech Tuesday evening, she didn’t mention the Convention. She didn’t mention Joe Biden.
After endorsing what sounded more like the platform Bernie Sanders would champion, she seconded the nomination of, Bernie Sanders.
You read that right. Bernie Sanders, not Joe Biden.
And while I did promise you Monday to talk about the three stocks that you should buy if Biden wins the election, we have to dig a little deeper first into AOC’s speech, why she seemingly upstaged Joe Biden with Bernie Sanders’ rhetoric, and what it means for those three stocks.
The upcoming election is going to change all our lives, not just because it will determine who the President is going to be, or how divided or united Congress is going to be, moreover because whatever the outcome is, there are going to be huge winners and losers in the economy and the stock market.
And being on the right side of all the opportunities ahead of us will truly be life changing.
While it matters who wins and who loses, to a lot of Americans, what matters to me is what’s going to change and how to position ourselves as traders and investors to make money from what will and won’t change, depending on the outcome of the election.
Aug 17, 2020
The S&P is about to touch a new high, and that will bring another leg higher as institutional traders and retail investors are forced to take nearly $1.3 trillion off the sidelines.
The news cycle this year has been crazy, crazier than ever, and this week was far from an exception. The new coronavirus updates coming from the CDC, claiming we’re seeing the “biggest fall, from a health perspective,” EVER and “sleepy” Joe Biden announcing Senator Kamala Harris as his running mate, were only the tip of the news iceberg.