Agora’s founder had it right in a December 23, 2015 entry in his Bill Bonner’s Diary: The right question to ask about a stock is not whether it’s going to go up but if it’s gone down enough to make it a good value.
Well, we’re getting very near levels where investors with the stomach to move against the herd oughta be identifying targets for addition to their portfolios.
Buy low, friends. Buy low.
Blood in the Streets
The S&P 500 Index is suffering a worst-ever start to a trading year, having lost 5.3% already in 2016. The world’s most widely followed equity index has shed 9% from its May 21, 2015 peak.
The Dow Jones Industrial Average is down 5.5% after the first five days of trading this year, it’s worst-ever start to a trading year, and is now more than 10% below the all-time closing high it hit on May 19, 2015.
And the Nasdaq Composite – the technology bellwether – is down 6.5% in 2016 and 10.2% from its July 20, 2015 all-time closing high.
Two of the three major U.S. equity indices are in correction territory. And the third is tumbling toward that 10% threshold.
This is what happens with stock markets: They go up, and they go down, sometimes in fits and starts, sometimes all at once.
But we know too that such selloffs won’t be continuous.
Technical analysis from Stephen Suttmeier of Merrill Lynch suggests it’s very likely the peaks we saw in late spring and mid-summer 2015 were of the cyclical as opposed to the secular variety.
At the same time, if we’re still in the “early innings” of a secular bull trend, with perhaps more than a decade left to run, this represents a long-term buying opportunity.
Here’s what I want you to do if you’re at all nervous about what’s happening with the world’s equity indices.
Take four and a half minutes out of your Saturday morning to listen to Wall Street Daily Chief Technology Analyst Lou Basenese talk about one of the major trends he’s watching for 2016.
No, Lou isn’t doing a lot of hand-holding about this market correction.
Yes, Lou is setting us up to establish positions that will help us build wealth over the long term.
Lou’s not the kind of guy who looks at a construct of thinking and just accepts it: He demands there be hard data supporting it.
How to Prevail
Predictions: At this time of year everyone’s making them. Even Lou.
In fact, earlier this week we published part one of our Chief Technology Analyst’s predictions for 2016. We’ll have another five forecasts from Lou on Monday.
What separates Lou from the chaff, however, is on display in this weekend’s Saturday Spotlight. If there’s a phrase I’d use to describe the way he goes about his business in Digital Fortunes and VentureCap Strategist, it’s “primary due diligence.”
That means, in addition to picking apart quarterly and annual filings, patent applications, and records of regulatory rule-making processes – yeah, tons of fun – Lou is in constant contact with the folks who make decisions at the companies he follows and recommends.
Lou digs in to the data behind the prediction he highlights – the acceleration in the rate of technology adoption.
There are some positive signs for us as human beings. And there are important takeaways for us as investors, too.
As Lou notes, “If the rate of technology adoption is accelerating, what’s even more interesting is our knowledge, our ability to innovate… is accelerating even faster.”
The “knowing versus doing” gap – which means we’re innovating so fast relative to the rate of technology adoption that the market can’t keep up – is the key takeaway.
There’s one major driver behind Lou’s Saturday Spotlight this weekend: Our focus must be on “breakthrough technologies” that are also investable – ones that are going to “take over the market.”
To reiterate: It must be ready for market.
Emphasis on disruptors that are ramping up their market penetration guides the research Lou conducts and the recommendations he makes in Digital Fortunes.
Wow, what a start to 2016.
As I note above, Lou Basenese has prepared a list of 10 things to watch for in the world of technology in 2016. We published part one on Thursday, January 7. Look for part two on Monday, January 11.
All this volatility must be headache and nausea-inducing for the normal among us.
For Senior Analyst Jonathan Rodriguez – our resident “steely-eyed missile man” – 2016 is shaping up as “The Year of the Trader.”
Jonathan also takes a deep-dive into the energy sector to identify an intriguing opportunity in the refining space, Marathon Petroleum Corp. (MPC).
According to Jonathan, “We’re much closer to a bottom in oil than a top. And for investors who can stand some risk for a potentially fat payoff, it might be time to fuel up.”
Master limited partnerships (MLPs) have been decimated by the massive and continuing selloff in crude oil.
Global Markets Analyst Martin Hutchinson asks whether MLPs are still viable vehicles for income-focused investors.
In the aftermath of several distribution cuts, Martin is still able to identify “a number of MLPs with high yields and cash flow that should cover payouts going forward.”
Finally, Senior Technology Analyst Greg Miller has a compelling piece on the combination of “a 150-year-old invention” and “a fast-growing, emerging technology.”
Get ready for Formula E and RoboRace.