Closer to a bottom but not enough to buy aggressively

Good morning!

The markets continue to wrestle with the Fed’s tightening plans. They’re modestly higher out of the gate on better-than-expected GDP numbers.

Don’t get ahead of yourself.

Focus on the “best stocks” and ignore the rest. Those that are trading well below their historic valuations should be at the top of your shopping list.

You don’t have to buy anything all at once.

In fact, times like these dictate you slow that down, a remark I made Monday during a conversation with the fabulous Stuart Varney ahead of the opening bell. (Watch)

LowBall Orders, Selling Cash Secured Puts, Dollar Cost averaging … these are all super-simple and super effective ways to blunt negative market action over time. And yes, boost your returns.

Here’s my playbook.

1 – Sorry JPow, the Fed really DID cause this

The Fed insisted inflation was transitory and took no action whatsoever despite mountains of real-world evidence to the contrary. That created a false sense of complacency allowing big traders to stay “on the gas” and retail traders to assume it was safe to go along for the ride. (Read)

Now Powell has decided to do something about “it” and that means some super-volatile market action in the months ahead. Which, naturally, savvy investors and traders can use to their advantage.

2 – Closer to a bottom but still too early to buy aggressively

Psychology has changed; here’s what I’m looking for. A) the latest AAII – American Association of Individual Investors – data is astoundingly bearish and that’s historically a great contrary indicator. B) companies with strong earnings are holding up more than those that don’t. Chevron is a great example. So’s General Mills. C) an increasing number of analysts are giving up and reducing ratings; naturally after the fact but reducing ratings nonetheless. (Read)

Incidentally, I recommended adding both of the companies I just mentioned – Chevron and General Mills to the One Bar Ahead™ Family months ago and am glad I did because they’re doing exactly what I’d hoped. If you’ve got this covered, that’s great. However, I’m here if you’d like some help (Learn More).

3 – McDonald's haven’t been this good since Bill Clinton was president

Uncle Ronald missed Q4 earnings this morning, citing lower revenues and higher costs. Only it wasn’t really a miss: a) net sales rose 13% to $6.01 billion and b) the company actually earned $2.23 per share if charges associated with selling McD Tech Labs to IBM are excluded. (Read)

You know what to do.

4 – Tesla just tipped its hand

CEO Elon Musk was clear even as he delivered better than expected earnings and revenues … no new models in 2022 and the chip shortage remains a concern. I lasered right in on his comments about a $25,000 car. Musk noted that they’re not working on that right now but, “at some point we will.” (Read)

That’s exec-speak for we’ve already got something on the drawing boards but cannot/will not comment on it just yet because we don’t want to hassle with analysts.

5 - Diem is DOA, or at least up in smoke

Facebook’s grand plan to create a stablecoin for the masses … err, for its own benefit … is apparently kaput. Early founding members like PayPal, Visa, and Mastercard bailed because they didn’t want the mounting regulatory scrutiny.

Now management is reportedly seeking a buyer that could absorb the engineers who developed the technology and “cash out the value left in the project.” (Read)

Call me crazy, but what value?

Most of the Diem team has already jumped ship starting last year with David Marcus who originally proposed the project and who led Facebook/Meta’s digital wallet effort.

Zucked again.

Still won’t touch the stock.

Bottom Line

There are gobs of people who want to throw up their hands in defeat at the moment.

I get it. The headlines are scary. Volatility is nerve-wracking. Wall Street is outta control and the Fed is clueless.

Here’s the thing.

Most of that is self-imposed.

Replace self-limiting doubt with "can do."

The markets will look different.

I promise.

And yes, you got this!

Now, as always, let’s get out there and make it a great day.


Keith

PS: Please join me in Las Vegas from February 24-26, just under a month from now. I’ll be talking about how to make 2022 your best year ever, what’s next for the markets and the economy and more. I’ll also be teaching a special breakout session that could be just the thing if you’ve ever wanted to learn how and why trading around core positions could be great for your portfolio. Sign up here.