CNBC: David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge

Yet, if you listened to the predictions of imminent collapse that are plentiful every day, while the market trends higher, you would have lost out on the great bull run since March 2009.

Stay long until the break occurs.

If the break is a pause that refreshes, get long again.  If the break gains momentum and trends lower, get short or in cash.

Note the predictions of doom, but let that only serve to remind that you need a plan for when a sustained downturn occurs.

It is still sunny out there.  Know where your rain gear is for when it rains, but you are foolish to wear a raincoat when it is not raining.

David Stockman:  HERE

 

Behind the Scenes

“It can be difficult to ignore headlines and soundbites from uber-successful investors because you want to believe that they’re giving you advice when they speak in public settings. My general rule of thumb is to ignore making decisions based on investing soundbites from legendary investors.

There are a few reasons for this.

First of all, there’s a good chance they have way more money than you, so the circumstances are completely different. Billionaires are playing a different ballgame than you and I.

Then there’s the fact that you have no idea what their time horizon, risk tolerence or overall strategy are in regards to their quip about the markets.

And finally, most really great investors are also really great marketers as well, so there’s no way of telling whether they’re really serious or just trying to earn some publicity or raise more money.

Investing based on soundbites is tempting but it’s more trouble than it’s worth.”

 

http://awealthofcommonsense.com/2017/07/soundbite-investing/

 

 

The Market is Going Higher. The Market is Going Lower.

 

It is true.  The market is going higher.  The market is going lower.

I just don’t know when, neither does anyone else.

Read the following two hypotheses about what may be coming next in the market.  Both are convincing.

http://www.tickerville.com/2017/05/27/33-and-no-one-cares-market-top/

http://www.marketwatch.com/story/why-one-hedge-fund-titan-is-bracing-for-all-hell-to-break-lose-on-wall-street-2017-05-26

Given the inability to predict the future, all you can do is make a plan that deals with the reality of markets broadly going up and down, but more up than down over a long time frame.

If you have money you need tomorrow, that should be in savings.

Money that you need in a year can be invested short term with a clear entry and exit strategy so that you do not lose too much capital.  Why not have a plan to step aside with at least some of your money when the next bear market hits?

Money that you can let work for 10 years or more should be invested in solid companies with good prospects.

If you have several solid stock holdings across several sectors, you should come out ahead.  Sector ETFs can also be used for this strategy if stock picking seems impossible.

If the above makes sense, do it.  If you can’t do it yourself, hire a professional to do it.

Sell In May and Go Away

There may be truth in the wisdom of playing it safe in the market over the Summer.

Utility stock SO,  The Southern Company, may be a good place to put some of your cash over lazy, hazy days of Summer.

4.64% dividend is offered, a fine looking chart, and a really good pattern of price appreciation almost every Summer.

 

Macy’s Inc

M pays a 5% dividend, so you are getting paid to wait.

A really bad earnings report has Macy’s ( ticker M) opening at around 26.50, below the 1998 high, way below the 2007 high and way , way below the all time high made in 2015.

It seems they have too much real estate for the reduced traffic in the age of online shopping.

When the stock shows sign of holding support, I am a buyer.

 

 

Great Post from “A Wealth of Common Sense”

http://awealthofcommonsense.com/2017/05/the-anatomy-of-market-tops/

Read the above linked to piece.

The take away from the analysis is simple.

Stay long in a bull market.

I will add to the “common sense” in the above analysis.

Stay long in a bull market, even if you take profits here and there and step aside on occasion to re-evaluate positions. No shame in that approach.

Staying long in a bull market is like walking a 5 foot wide beam 2000 ft above a gulping gorge.  It is a good risk if there is a reward on the other side.  5 ft. is plenty for a stroll. Scary as heck, but you can do it.

If you try and call the top, and remain uninvested as a result, you will lose money.

You are terrified of losing your hard earned money? You should be.  That is a problem with a solution.

Buy stocks and ETFs at support or breakout points, limit your position size until you have a profit cushion, and always have an exit strategy.

Hate taking a stop loss?  You are not alone. If you cannot take a stop, at least commit to starting all positions with a small size that can lose 50% of it’s value without hurting you too much.

Only add to winning positions, but be warned.  A big winner can become a loser if you have no plan for exit.  Take profits along the way, or trail a stop.

If you cannot do any of the above, get a pro to run your money.