Investors,
You must pay attention and be vigilant in the upcoming months.
We’re all going to see a bunch of headlines and misleading articles designed, almost intentionally, to instill fear in us as investors. The journalism industry, by its very nature, is dependent on clicks and attention, thereby relying on fear-based tactics to captivate your attention and create an illusion that you need to read the article to protect your financial future.
They’re going to invoke risks around the election, war/geopolitics, earnings, fiscal spending, interest rates, the labor market, the Fed, the yield curve, commercial real estate, labor union strikes, etc., etc.
On each of these points, I would simply ask: have these narratives helped investors?
The short answer is, unequivocally, no.
On the contrary, focusing on these risks as a justification to sell risk assets (or worse, to short the market) has been arguably the biggest mistake that investors could’ve made in this market. And when I say “this market”, I mean the past two straight years.
Today, October 13th is officially the 2-year anniversary of the bull market because the S&P 500 bottomed on October 13, 2022. It’s been two years since we reached a turning point in the market and began this epic bull market rally.
Since then, it’s gained a whopping +65.99% (and a total of +70.7% including dividends).
It’s not just the cap-weighted index that’s doing well either… as the equal-weight version of the S&P 500 has gained +49.04% (including dividends) since the October 13th lows. Certainly, it isn’t performing as well as the regular index, but that’s what happens when you’re underweight the Magnificent 7, tech, and growth stocks during a bull market.
So, by definition, being out of the market due to perceived risks has been a horrendous idea.
I’m telling you all of this, which might seem like basic information, because it’s a simple but core aspect that all investors must understand. But simplicity, clearly, pays.
Remember, bears sound smart. They highlight niche datapoints or concepts, or complex issues, which inherently make them sound like experts (because they are), but they continue to miss the biggest money-making opportunities in the market.
If our goal is to make money or grow our net worth, sounding smart doesn’t pay us.
What does get us paid is following a systematic approach, analyzing the objective data, and coming up with a well-rounded market thesis.
That’s what these weekly reports are intended to do.
Trust me, there will be a time to be bearish; however, now is not that time.
Let’s begin…