TODAY’S INVESTMENT ADVICE ,
by Murray Soupcoff
Phew … after what seemed like a world-wide stock-market implosion that wasn’t going to end, finally a relief rally in the last couple of days!
However, that’s not to ignore the fact that between last Thursday and Monday, the Dow Jones Industrials dove nearly 1,500 points (almost as fast as Hillary Clinton’s approval ratings after a chronic “drip, drip” of revelations of her server violations -- so bad that she might soon have to order several years’ worth of new striped 'pant suits' for her stay in her new “big house”)!
1500 points is a lot of territory to cover in such a huge descent, in such a relatively brief period of time – almost as fast as it took The Donald to alienate the entire Hispanic community in the United States with his “frank” talk on illegal immigration!
But is this market drop sufficient to indicate that perhaps the worst may be over, and this MIGHT be a good opportunity to start metaphoricallly dipping your toes in the “buying stocks again” waters?
A study of previous historical market meltdowns suggests the time might just have come:
(1) In particular, a plethora of market breadth indicators are metaphorically screaming “oversold!”
For example, the depressing percent of stocks listed on the NYSE -- which are trading above their 50-day moving average – aligns with with major stock market lows over the past five years.
Because what goes up so high & relatively quickly, inevitably imitates Icarus --flaming out and dropping even further and more quickly.
But what happens when you submerge an inflated beach ball under water as long as you can? It pops up with a vengeance – almost hitting you in the face.
And that’s what happened in the stock meltdown of 2011 in America: After a few months of what traders call “dead cat” bounces (trying to catch them is like trying to catch a falling knife – there’s usually a bloody aftermath), the S&P finally climbed the proverbial market “wall of worry” and rose over 31 points higher in a time period of approximately six months.
And when historical market lows in occurred in 2012, 2013 and even in autumn 2014, U.S. stocks ultimately soared higher.
But the recent market fall is the champ – the biggest drop since 2009.
So if the past ultimately becomes today’s new reality, a rebound is probably around the corner (in my opinion anyway).
So if you’re willing to be patient -- and hold onto any stocks you purchase for at least two years (while you collect the dividends) – then (in my opinion) it’s time to start “accumulating” – slowly buying -- cash-rich, debt-free "dividend" stocks (stocks that pay a 'sustainable" annual dividend) each time the market dips.
I’m off on a brief weekend cottage vacation tomorrow (Friday August 28th).
But when I get back next week I hope to provide you with a list of “recommended by Soupcoff” dividend stocks to buy during periodic market dips in the immediate future.
Until then, nuff said until we meet again on Tuesday or Wednesday!