What’s up, Money & Markets peops?
I’m Joseph Hargett, aka Mr. Great Stuff … aka that market-meme-making, song-lyric-slinging shill who writes those Great Stuff daily emails that keep cluttering up your inbox — or at least they should be!
For better or for worse (hopefully for better), the powers that be here at Money & Markets reached out to me — of all people — to get my take on a stock market that’s been pulled over your eyes.
Yes, dear reader, the market has been pulled over your eyes.
The U.S. economy is headed toward unemployment figures last seen during the Great Depression. Weekly initial jobless claims, while improving, still arrive in the millions. U.S. gross domestic product also shrank a wider-than-expected 5% during the first quarter.
And yet, the wheel in the sky — err, Wall Street, keeps on turning.
In fact, stocks are once again headed toward all-time highs. It’s like the coronavirus pandemic never happened! Like millions of voices never cried out in jobless horror and were suddenly silenced.
Many of you are likely confused … and not only by my pop culture references.
How can the stock market continue to rally when the economy is in a shambles?
In answering, here are two crucial axioms to remember:
The stock market is not the U.S. economy.
The stock market can remain irrational longer than you can remain solvent.
While the first axiom is true, there is one caveat: Stock values are supposedly based on a company’s perceived forward earnings projections. In other words, a struggling economy will lead to lower earnings, thus eventually leading to lower stock valuations.
However, due to the second axiom, we’re all still waiting for the stock market to become rational and realize that earnings will be lower for longer than many expect. Even Federal Reserve Chairman Jerome Powell knows this.
This leads us to probably the most important piece of advice I can give you about investing in the current market insanity …
In my 15 years of investing and following the stock market, I’ve learned one critical lesson: You must be a long-term realist and a short-term opportunist.
Just what do you mean by that, Mr. Great Stuff? (Yes, I talk to myself. It’s a feature, not a bug.)
What I mean is that there are investment opportunities that will outlast market turmoil. Gold, U.S. Treasury bonds and currency funds for instance. Furthermore, there are stocks you will also want to hold on to regardless of what’s going on in the market.
Microsoft Corp. (Nasdaq: MSFT), Amazon.com Inc. (Nasdaq: AMZN), The Walt Disney Co. (NYSE: DIS), Boeing Corp. (NYSE: BA) … there are many more, but these are all companies that have “been there, done that” when it comes to market plunges and recessions.
Stocks like these will hold their value better in a market downturn and will return to all-time highs faster than the rest. Companies like these are your “long-term realist” plays for any market environment. Buy companies like these. Hold them, and don’t think about them until you retire.
While most of your investment capital should be in long-term realist investments, take short-term opportunities, too!
Right now, those opportunities lie in biotech and any company that makes it easier to work and shop from home. Not to brag (OK, I’m bragging), but Great Stuff readers have banked three triple-digit winners this year by taking advantage of short-term opportunities.
On February 28, Great Stuff readers locked in a 212% gain on personal-protection equipment maker Alpha Pro Tech Ltd. (Nasdaq: APT) right as the news broke that everyone should probably wear masks.
On March 9, readers bagged a 117% gain on Inovio Pharmaceuticals Inc. (Nasdaq: INO) right as vaccine mania took hold in the biotech sector.
On May 22, readers again banked a triple-digit winner with a 113% gain on Shopify Inc. (NYSE: SHOP) as the company benefitted heavily from the growing number of small businesses moving online.
(Did I mention that Great Stuff is free? Sign up here now!)
The bottom line is that the current market may seem scary, but in reality, there’s not a lot to worry about if you stay calm and invest on.
Keep your head. Don’t panic. But also realize that the market is messed up and completely out of touch with the economy.
Armed with this crucial market knowledge — and a fair amount of humor and pop culture thrown in — Great Stuff is there to help see you through this crisis with (hopefully) laughter and profits.
Until next time, be Great!
Joseph HargettEditor, Great Stuff
• Joseph Hargett is the Editor of Great Stuff, a daily e-zine covering on the biggest trends on Wall Street with a dash of humor — finance with an edge — for Banyan Hill Publishing. He has more than a decade of experience as an analyst, specializing in options trading. Mr. Hargett has been a contributor with Forbes and InvestorPlace, and is regularly quoted by The Wall Street Journal, The News York Times, Money Show Digest, Reuters, USA Today, MarketWatch and more.
Sign up for his Great Stuff newsletter and follow Mr. Hargett on Twitter @BHGreatStuff.