InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

These contrarian stocks thrive in good markets and bad

These contrarian stocks thrive in good markets and badIn my new profit guide, I reveal a group of super-safe stocks that don’t behave like regular stocks during market downturns. In fact, these rock-solid beauties historically SKYROCKET and THRIVE during the worst of times. During the last three market busts, stocks in this contrarian sector soared 42%… 135%… and even 200%. Do yourself a favor. Check out my free profit guide today.

 

Stocks Rise Friday, Capping a Terrible, Horrible, No Good Week

By John Persinos on February 9, 2018

My Millennial daughter is a mom these days. When she was in kindergarten, she loved it when I read to her a 1972 children’s book called Alexander and the Terrible, Horrible, No Good, Very Bad Day.” The book has since been made into a movie and a stage musical. You can guess the plot.

I thought of the book’s title this week, while watching the markets gyrate. Stocks closed Friday in the green, a positive ending to an otherwise soul-crushing week. Trading today was volatile. The Dow Jones Industrial Average rallied more than 1,000 points from its session low.

Despite their rise today, the Dow and S&P 500 are in correction territory for the first time in two years. The Dow has had its worst week since January 2016.

Crude oil on Friday fell below $60 per barrel for the first time this year. The U.S. benchmark West Texas Intermediate plunged 3.14% today to close at $59.23 per barrel.

The culprit: Baker Hughes on Friday reported a big jump in the U.S. rig count. The firm said the rig count increased by 26 (the largest jump since April 2013) to 791 (the highest since April 2015). The Permian basin rig count saw the greatest increase to the number of rigs at 10.

Oil production is rising faster than expected. The U.S. Energy Information Administration (EIA) predicted this week that U.S. oil production would top 11 million barrels per day this year. Last month, the agency said the U.S. wouldn’t hit that threshold until November 2019.

See the chart that juxtaposes Baker Hughes and EIA data. Robust production presses on oil prices. Crude fell about 10% this week. The falling price of oil worries investors.

When consensus collapses…

The market swoon underscores the importance of being a contrarian. I’ll cite a timely reason why.

At the World Economic Forum in Davos, Switzerland two weeks ago, the head of the world’s largest hedge fund made a widely reported statement: “If you’re holding cash, you’re going to feel pretty stupid.”

I wonder who feels stupid now. Not you, if you’ve been following my advice. I’ve consistently warned about excessive valuations. For the past few weeks, I’ve recommended protective measures against a correction.

I’ve suggested paring back exposure to momentum stocks, elevating cash levels, and increasing your weighting to inflation hedges. I’ve also advised using stop-loss orders for limiting the level of loss from a dropping stock.

What triggered the market carnage of the past two weeks? Rising bond yields, caused by inflation fears. Those inflation fears are stoked by the $1.5 trillion tax overhaul. It’s starting to dawn on Wall Street that tax cuts could overheat the economy.

Beware of sweeping pronouncements from famous people in power. Bold assertions without nuance usually turn out to be wrong. Whether it’s uttered by a Democrat, a Republican, or a yakker on cable television, the conventional wisdom is almost always misguided.

Leading up to the market rout, the consensus was overwhelmingly bullish. Nosebleed valuations just didn’t seem to matter. We’ve just been reminded that they do matter.

My readers know that I’ve been warning about a correction of at least 10%. The main indices are now about 10% off their all-time highs.

Does Friday’s bounce mean that the correction is over? Don’t bet on it. Valuations remain excessive and risks continue to mount. Political uncertainty will only get worse. Stay on your guard.

Friday Market Wrap

  • DJIA: +1.38% or +330.44 points to close at 24,190.90
  • S&P 500: +1.49% or +38.55 points to close at 2,619.55
  • Nasdaq: +1.44% or +97.33 points to close at 6,874.49

Friday’s Big Gainers

Aviation supply chain manager beats on earnings.

Tobacco leaf merchant to expand into cannabis, e-liquids.

Energy services firm beats on earnings and revenue.

Friday’s Big Decliners

Energy MLP disappoints on earnings.

Oilfield services firm posts weak earnings.

Lender to non-prime consumers misses on earnings and revenue.

Letters to the Editor

“What role does China play in renewed inflation fears?” — William G.

The huge economic stimulus program China launched immediately after the Global Financial Crisis helped reflate the global economy.

This aggressive program pulled China out of deflation into inflation from late 2008 onwards. This trend in turn fueled price rises in the West. The bill for this stimulus is coming due.

Question about inflation? Drop me a line: mailbag@investingdaily.com

John Persinos is managing editor of Personal Finance and chief investment strategist of Breakthrough Tech Profits.


You might also enjoy…

 

Forget Buy and Hold. Here’s how to retire faster…

I’m not a fan of “buy and hold.” Gurus like to tell you that patience is the key, but I call horse puckey.

We’ve discovered an investing technique that consistently pays out easy-to-repeat profits.

One that’s proven to beat the market 2,082% in head-to-head testing.

And one that’s generated over 488 winners since 2011.

This method is so powerful, in fact, some of the investors we’ve let use it reported back to us saying they’ve made $71,425… $82,371… and even as much as $151,000 in a single year thanks to this “trick.”

That’s how powerful this investing technique is!

What what exactly is this mysterious method? I’ve put all the details together here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.

Stock Talk

  1. avatar
    Andy Reply February 12, 2018 at 3:29 AM EDT

    “Political uncertainty will only get worse.”

    Can you expound on perhaps the top political issues you are concerned with? Political uncertainty due to the corruption of the DOJ, FBI, Clintons, and previous administration? Sabre rattling with North Korea, China? Israeli retaliation against Iran? Deficit spending of 1+ trillion by Trump (even when such deficit spending garner little attention from Obama)? Just what are the market risks?

  2. avatar
    George McMillion Reply February 10, 2018 at 12:32 AM EDT

    Thank you, lot of good info here.

    George