Let’s do this week’s Live Q&A Chat at 4pm ET today. It won’t be live streamed — it’s just a good ol’ fashioned typed-out chat here in the chat room. You can also just email me your questions to firstname.lastname@example.org and I’ll include them in the transcript. I’m around this morning too, so post your questions!
The biggest difference in my approach right now vs what my approach has been for the last eight years is that I’m selling the rallies rather than buying the dips. So many times in the past few years as I’ve been so strongly bullish, I’ve used any meaningful pullback in the stock markets as an opportunity to buy more of our stocks, add new names cheaper than I would have gotten to otherwise, and even occasionally to buy call options on our stocks and/or the indexes.
Right now, my analysis has me more cautious than usual. Here are some of the main reasons why:
- Stocks are up huge in over the last eight years, five years, two years and one year. A rest and/or a panicky pullback or two for the next few months, at least, seems reasonable.
- Greed is definitely the more dominant emotion amongst the general public for the last year as reflected in any five year or two year cryptocurrency chart.
- Complacency seems to be the dominant emotion amongst the “smart money” and/or the institutional money. When was the last time you heard a money manager freaking out, scared and exasperated, much less crying and sick to their stomach?
- You saw my list yesterday: The increasing trend of restricting capital flow in the name of national defense. We all know the Chinese are serious about stopping capital outflow. The EU claims it’s not protectionist, but Brexit and other trends in the union say otherwise.
- Trade wars aren’t good for stocks or economies or prosperity. I have a question: Is the threat of a trade war actually constitute the first shot in trade war? Trade wars aren’t fought with guns after all. And did you notice these headlines about how large consumers of steel and aluminum have been stockpiling and over-ordering steel and aluminum supplies since they they had heard that Trump might be putting a tariff on steel and aluminum? So Trump’s threat of a tariff has already affected the global economy, no?
- I’ve mentioned many times over the years that it’s often not trading that is the best trade to make. We don’t have to be all in or all out. We don’t have to try to beat the indexes every quarter or every year. We are trying to maximize our gains and minimize our risks for the next three decades.
On the other hand, trying to time the exact top of any bull market, especially a Bubble-Blowing Bull Market, is next to impossible. And it’s not as if there’s a tangible crisis or unraveling of the economy that’s the reason for my concern like there had been back in late 2007 when I was indeed calling a top.