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Jul 08, 2024

Good morning! 👋

The S&P 500 tapped yet another record intraday high as I came off camera earlier this morning ahead of the opening bell. And it’s still green as I type.

Can it last?

Definitely.

But and to a point I made in last night’s Sunday thoughts from the garden, I will be very surprised if the big money doesn’t come storming outta the gate to the downside at least once this week.

Here’s why.

That’s how big traders play the game and how they separate the weak hands – read emotional, uncertain retail investors here - from their money; and
Many of ‘em are still offsides – meaning they fell for the doom, gloom, and boom narrative we’ve gone to great lengths to avoid – so they’ve got to play catch up.

Keep your wits about you.

Remember.

Being in to win is how you win. And yes, buying stocks that beat the markets is how you actually beat the markets.

This isn’t rocket science.

Here’s my playbook.

1 – Why I don’t worry about market “narrowness”

There’s a line of thinking making the rounds that market “narrowness” is a bad thing.

Not true.

In fact, I’d be very worried if the markets weren't narrowing up.

History shows very clearly that’s what they do every time there’s a major transitional wave in human history.

We stand on the cusp of the 6th wave.

I believe there will be more profits created in the next 10 years than the last 50 combined.

That's how innovation works.

Keith’s Investing Tip: You can fight this all you want or listen to the “yeah but” crowd if you’d prefer – a lot of people do. Either way, innovation will continue and – you guessed it – profits will follow. Getting your money there first can make all the difference, especially if you’re using the right tactics to control risk every step of the way.

Btw and while we’re at it, if you have no idea what to do next or what to buy, I’d like to toss my hat in the ring. You may find One Bar Ahead ® helpful. If you’ve got this covered and you’re achieving the results you want – excellent!!!!

2 – Palantir eyeballing $30

Investors are figuring out at $26 what we knew at $6 - $7 but that’s okay.

Better late than never as the old saying goes.

The company generated more profit in Q1 than it used to in a year a decade ago. I can’t wait to see Q2 results when the company reports in early August.

My take with the fabulous David Asman - along with Tesla, Microsoft, Nvidia and other stocks in the news this morning ahead of the opening bell. (Watch)

3 – Gaining scale = the real reason for merger mania

Chances are you’re hearing a lot about various M&A (mergers and acquisitions) lately.

Examples from today’s headlines include: Carlsberg buying Britvic, Paramount merging with SkyDance, Lilly buying Morphic and Devon Energy buying EnCap-owned Grayson Mill Energy’s Williston basin business .

This isn’t about creating stronger companies like M&A used to be.

These are all companies merging or joining up to achieve “scale” because it’s the only way they’ll survive.

Buy the best, ignore the rest.

And do NOT fall for the clickbait crowd who’ll tell you all sorts of things about buy out premiums and the like. Much of it used to be true, but very little of it is today.

4 – Boeing pleads guilty, now the work begins

Boeing has pled guilty to criminal charges for its role in deadly 737 Max crashes. (Read)

The stock is up 3.17% to $191.51.

Should you buy it?

I’m not.

The plea eliminates court discovery so the investigation that’s underway will never see the light of day and the investing public will never see the proverbial “half of it.”

What's more, who, how and when are “they” going to inspect all the aircraft that are at issue.

Part of the whistleblower disclosures include concerns related to bolts holding the fuselages together.

No, thank you.

Not as an investor and sure as heck not as a passenger if I can avoid it.

If anything, I’m tempted to buy some ATM putskies and place a quick bet to the downside ahead of the next headline... and you just know there’s gonna be one. 🤦‍♂️

5 – Do this if you're scared of a selloff

People ask me frequently what they can do if they fear a selloff.

My answer usually surprises ‘em.

Buy GREAT companies.

Here’s deal.

Today’s markets are so inter-linked and so computerized that there isn’t any way to avoid one.

The real question the one you want to ask yourself is what you’re going to do about it.

Ahead of time.

Start with owning great companies in the first place, preferably those that pay rock solid, super steady dividends.

My research and that of people a lot smarter than I am shows very clearly that dividend paying stocks tend to fall less, stabilize faster, and recover more quickly.

See my point?

Speaking of which, OBAers... keep an eye on your email. I think one of our most consistent dividend monsters is ready for another big move higher. It's returned 53.40% over the past 3 years versus the SPY which has turned in 33.51% over the same time frame – I'll have the scoop in this week’s update.