The advice is sound, very sound. Move part (at least of your portfolio to cash and sit out the worst of this bear market on the sidelines. And since you have that cash in hand, you’ll be ready to snap up bargains when the market has put in a bottom (or near the bottom, or on the way up from the bottom…or something.) But right now that’s easier said than done.
It is different this time: Part 1 and Part 2 of my Special Report: Your Best Investment Strategy for the Next 5 Years. And finally the full Part 3 with strategies and picks for the 5-year period including the “out” years. It’s likely to “be different this time” for the next five years or so. And you need an investment strategy for that period.
There are bargains in this market. But how do you find them? Not, clearly, by looking to see what is cheaper than it was. The fear that’s stopping so many investors from loading up the truck now on Nvidia or Disney or Microsoft or Johnson Controls–all stocks that I really, really like for the long term–is that today’s “cheap” stocks will be tomorrow’s even “cheaper” stocks. So it’s time to dig into your investor’s toolbox and dust off those tried and true techniques for using company fundamentals to figure out the value of a stock. And for separating the real values in this sell off from those cheap stocks on the road to being cheaper.
All you have to do to find the high profits that will make the risk of investing in climate change stocks worthwhile is to focus on sectors (1) where the rewards are solid and the risk is quantifiable, (2) where companies are making profit the old-fashioned way by building out networks and then charging high rents to use them, by (3) carefully targeting a few technologies (wind and solar and hydrogen and electric cars) that will be part of any mix of solutions, and (4) by investing in bottlenecks that are likely to drive prices up (and provide good profits for companies that resolve the bottleneck.
I think these financial market curves will let you map out the longer stories of Federal Reserve interest rate increases and a potential recession–and then chart the shorter stories of war in the Ukraine, global oil and natural gas crunches, summer Pandemic relief, global food crisis, computer chip shortages (and whatever else you think might be important) under those longer curves. That will let you decide when to buy and sell (and what) in order to profit from short-term stories while preparing your portfolio for the longer arcs.
In order to meet my 5 p.m. “in your inbox” deadline today, I’m going to give you the name of my 12 picks and the logic for dividing them into three groups that correspond, roughly, to when you should thinking about adding these stocks to your portfolio.
But I’m going to save the specific reasons for each one of these 12 stocks to tomorrow. I’ll add them to the standing Recession Special Report and create a separate “reasons” post then. I’d divide my 12 Recession Stock Picks into 3 groups.
A Recession is coming! Probably.The odds are now high enough so that you and your portfolio should pay attention. So there are really three important questions. First, how likely is a Recession?In this Special Report I’m going to lay out the reasons for thinking that a Recession is on the way. Probably in the second half of 2022 or in 2023. Second, what strategies should you, as an investor, use to navigate in your portfolio through a Recession? In this Special Report I’m going to explain three strategies–call them general rules of the road–for investing during (and after) a Recession.
And, third, what specific stocks or bonds or ETFs or options should you use to implement those strategies to give you the biggest investing edge possible during this Recession? That’s where the 10 Recession Stock Picks come in. Look for that post tomorrow, March 22.
Today, March 17, the stocks, and especially the technology stocks, that have been pummeled in 2022 continued their three-day bounce. For another day, at least, buy on the dip proved to be a very profitable adventure. Lithium recycling startup LiCycle (LICY), for example, gained 10.18% after climbed 6.74% on Wednesday, March 16. Electronic payments platform Block (SQ), formerly known as Prince (no, I mean formerly known as Square) rose 10.26% after picking up 12.57% on Wednesday, March 16. Cybersecurity newcomer SentinelOne (S) climbed 7.48% after a gain of 13.47% on March 16. Stocks like these (and many more) were just too cheap traders decided. But there were signs of, possibly (and we’ve been down this road before so let’s just say “possibly”), of a new caution. A sell on the bounce caution.
In this New Market you need stocks like the 10 picks in my New Edge Portfolio to supplement the 10 solid winners of the New Core Portfolio with which I kicked off the first part of this Special Report: 10 stock picks for a New Core Portfolio for New Market. And watch out for Part 3 coming this week
To get to my 10 picks for my Special Report: A New Core Portfolio for a New Market, let me start with the second half of that title, the new market part. Why do I think we’re headed into a new market–and what kind of stock is this new market likely to reward with gains? And then onto my 10 picks for a New Core Portfolio.
Take a look at Peloton Interactive (PTON) and Netflix (NFLX) just in case you need a reminder of one of the essential characteristics of this stock market. One that makes it so hard to tell where the market as a whole is going, and what individual stocks are headed up or down (and often down big time.) What growth rate should an investor use in trying to value the stock? Who knows? Which is exactly the point and not a problem limited to Peloton in this economy. I’ve found a handful of stocks with reliable internal growth stories that make them great buy-on-the-dip candidates for over performance in the second half of 2022. I’m making three of those stocks–Apple (AAPL), Disney (DIS), and Chipotle Mexican Grill (CMG)–my last 3 picks for my Special Report
In the first section of this Special Report: When will the selling stop? When to buy What to buy” posted back on January 11, I said that I’d look to buy in tiers. And thus stagger my buying to take account of any earnings season selling and any volatility around the Fed’s January 26 meeting. In the first tier, I said, back on January 11, I said I’d look for former momentum and earnings growth favorites, especially in the technology sector, that had taken big hits in the selling from the November 19 high. The three first tier buys were Nvidia (NVDA), Advanced Micro Devices (AMD), and and the first three buys back on January 11 were Nvidia (NVDA), Advanced Micro Devices (AMD, and Adobe (ADBE). I said I’d name my second tier picks after bank earnings. Which means today.
