The weak hands of the market are nothing like the little October turmoil to help them come into contact with their inner bears.
But don’t let their negativity rub on you. We are still at the beginning of what will be the Multiar Bull Market. Six reasons to buy stocks right now, and six names to consider among the best sectors owned at the moment.
1. Feelings have been patient enough
I regularly track investors ’attitudes in my stock letter (link to details and bio below) in order to“ call ”the opposite in the market. While most of your money should be in long-term holdings, timing entries give you an edge when most people are bearish. Now that is the case. Feelings aren’t extremely negative, but it did fall enough this week to trigger a buy signal on my system.
It is also worth noting that major media figures have turned out to be quite negative this week, another good contrast signal. (I won’t name names.) And their negativity is a bullish signal in my book that doesn’t mean I think they’re dense. It’s just that high-profile media commentators are sponges of sensuality. This is a professional risk – which we can use to our advantage as investors.
Choose your favorite popular financial media talking heads, then do the opposite whenever they become consistently negative – or positive.
2. Se Tu is for us
The worst months for stocks are October, and the weakest days are October 10 and 11. Then this vague month is after the strong January-May period when the market is strengthened by the arrival of new money. Of these, November and December may be stronger as stocks rebound at the end of the October weakness and mutual fund tax-loss sales season. Which ended at the end of October.
3. Covid is spinning
It is no secret that the number of cases and hospital admissions has declined rapidly. Last year, the winter weather didn’t come in the winter covid flu season. So, it’s not too crazy to expect the same thing this year, especially given to all people who have been vaccinated or infected. Restarting will help boost the economy.
4. An amendment has already occurred
Since the summer, the market has experienced rolling corrections in various sectors. Russell 2000 RUT,
Was below 10% in August, defining a correction. Cycling, retail, technology and much more have been damaged. In early October, 90% or more of the S&P 500 SPX,
And Nasdaq Comp,
Liz Ann Saunders, chief investment strategist at Charles Schwab SCHW, notes that by 2021 the decline is at least 10% from the height,
In other words, when everyone was looking for a fix, it already happened. There is a fun way to deceive most people in the market this way.
5. Strong families have been formed
The millennium is finally leaving the parent basement – if ever there is any truth to this clich.
What is true: They are entering the prime age for marriage and family. Also, the economy is moving fast so they feel confident enough that they can gain home ownership.
The result: Household composition now stands at about two million per year, more than double the rate in the last five years. Home buyers need to buy lots of things to fill those new homes. This is a built-in economy booster.
6. Consumer scared, locked and loaded
At least half a dozen natural resources are ready to drive growth in a stimulus economy, whether the Fed tapers or not, said Jim Paulsen, an economist and strategist at the Leithhold Group. One is that the char structure, mentioned above. Another is the low-level list of companies – which need to be restarted in the big time. But the biggest to me is the consumer, because consumer spending is a big driver of our economy.
Bottom line: the consumer is scared. But they do have a ton of purchasing power to tap when their worries subside – perhaps the covid continues.
Now a little detail. August consumer sentiment was at its lowest level since the onset of the epidemic, as measured by the University of Michigan Consumer Sentiment Index. It comes up in September, but it’s still low.
At the same time, consumers have a huge purchasing power. Private savings account for about 12% of GDP. Paulsen notes that this is double the long-term average of about 6% -7%. Net value compared to income at record highs.
Don’t make the mistake of thinking that getting rich just because of the stock market. Houses have also become much taller, and most people own homes. The ratio of household debt to personal income is the lowest since 1985.
“Consumers are scared and filled with unused purchasing power,” Paulsen said. “This pessimistic mentality, combined with excess purchasing power, has historically gained a solid market with a sharp decline,” he said. “This ratio represents a bull market that is still in its infancy.”
Stock To buy
Since consumers are a big part of this dynamic, I say go with retail stocks. They were inferior, which makes them look attractive.
Morningstar Bath and Body Works quotes BBWI,
As a retailer with a groove and a discount trading. The body care and home fragrance retailer has a four-star rating as its stock is trading below $ 79 for Morningstar’s “fair price” name.
For mining, analyst Jaime Katz cites the company’s strong brand, its leadership position in its position, and an average return of 30% of invested capital, above the average cost of 8% of its capital value.
Eric Marshall, Hodges Small Cap Fund HDPSX Portfolio Manager,
Clothing Retailer Prefers American Ag Gull Outfitters AEO,
Which is less than 35% from this year’s height. The company posted record revenue of 19 1.19 billion in the second quarter, up 35% year-over-year.
Core Growth Driver is its popular Aerie brand. Marshall expects the company to earn more than $ 2 million this year, which is about 13 times the forward earnings bargain for AmericanGall stock.
Marshall deserves to be heard because he has a warm hand. According to Morningstar, its Hodges small-cap fund has grown 31% this year, beating its small mix division and the Russell 2000 index benchmark by 12 to 18 percentage points.
Marshall Academy prefers sports and outdoor ASO,
Which sells sports and outdoor entertainment items. The epidemic was a storm for this organization due to the popularity of outdoor activities. Strong epidemics helped keep the sales company away from its high debt levels. Analysts are concerned that the epidemic-inspired popularity of outdoor activities will decline, but Marshall thinks outdoor lifestyles will remain prevalent.
Although many retail investors are surprised at the power of Amazon.com AMZN,
And Walmart WMT,
Asit Sharma, an analyst in the Motley Flower retail sector, is in favor of the special chains that have achieved the “direct consumer” sales model. They offer great stores and solid products, but also a mix of delivery options that shoppers want সহ including in-store pickups of items purchased online.
“The retail sector gets a perennial bad rap because everyone is focusing on yesterday’s story, that Amazon and Walmart are removing all physical stores,” Sharma said. But it is not. Many retailers offer excellent store experiences and a mix of unique products that the two retailers can’t really offer.
Here, Sharma quotes Lululemon Athletica LULU,
“We like the fact that the company spends on fabric for its own research and development innovation.” The stores give customers the opportunity to personally check out custom fabrics.
Sharma Yeti Holdings on behalf of ETI,
Which sells coolers, “drinkware” and outdoor equipment. For a big cap name, consider the popular retail giant Target TGT,
For its “everything under one roof” approach to retail.
Michael Brush is a marketwatch columnist. At the time of publication, he was the owner of AMZN. Brush recommends AEO, AMZN, WMT and TGT in its stock newsletter, Brush Up on Stock. Follow him on Twitter Brushstock.