Current Stock Market Trends: Embrace Strong Deviations

Current Stock Market Trends

Current Stock Market Trends: Embrace Strong Corrections

Buffett’s latest views on corrections and the coronavirus

‘It wasn’t October 1987, but it was an imitation… [and the financial crisis] was much more scary, by far, than anything that happened [on Monday].’

“If you stick around long enough, you’ll see everything in markets,” he said from his Omaha headquarters. “And it may have taken me to 89 years of age to throw this one into the experience, but the markets, if you have to be open second by second, they react to news in a big-time way.

The astute investor now has a front-row seat to witness in real-time that the best time to buy stocks is when the masses are in a state of disarray.  They are now throwing the bathwater with the baby, grandpa, grandma and the family pet out. It is in such moments that the astute investors find real bargains. One needs to be patient for these opportunities and more importantly act when they present themselves. As usual, the crowd will panic and fee for the hills, when less than two weeks ago, they were begging for a chance to get into the very stocks they are now running from.

Nothing changes and that is why the masses are destined to lose. If you examine every single bubble in history, the storyline is the same.

Current Stock Market Trends; Long Term Bullish

 

These readings were tabulated before yesterday’s pullback (July 31st), so a few more days of selling, could propel bearish readings. It is incredibly surprising that at this very late stage of the game, to see such a small number of individuals in the bullish camp. Once again, we have to reiterate no matter how strongly you might feel that this market should crash and burn, don’t act on those sentiments.  No market in history has ever crashed until the masses have embraced it, and we don’t think this Bull market is not going to change that equation.   Market Update July 31, 2019

And viola one week later, the outlook has changed, which proves that the masses are so fickle it’s going to take a lot of effort for them to embrace this bull with a gusto. That’s excellent news, for it means this bull could soar even higher than we have

Conclusion

If the market pulls back, it’s a bonus, and this is why we also adopt the stance that when the trend is up; the stronger the deviation, the better the opportunity.  Strong pullbacks should be viewed as early Christmas bonuses as the trend is firmly up. Sharp pullbacks can be used to open or add to one’s current positions.  Market Update July 24, 2019

If yesterday’s pullback gains traction, then embrace, for it will prove to be a buying opportunity.  The best time to buy is when the trend is up, and one feels uncertainty creeping in and vice versa.  When one is sure that everything is fine and the markets are destined to trend higher, then it is more likely that the opposite will come to pass. Market Update July 31, 2019

Hindsight is fantastic, for it gives you all sorts of wonderful ideas that most fail to ever put into action when presented with the same situation again.

Random Notes; Buffett’s view on Stock market crashes

“You, as shareholders of Berkshire, unless you own your shares on borrowed money or are going to sell them in a very short period of time, are better off if stocks get cheaper, because it means that we can be doing more intelligent things on your behalf than would be the case otherwise,”

“The real question is: ‘Has the 10-year or 20-year outlook for American businesses changed in the last 24 or 48 hours?’” the billionaire investor said on CNBC.

“You’ll notice many of the businesses we partially own, American Express AXP, +0.86% , Coca-Cola KO, those are businesses and you don’t buy or sell your business based on today’s headlines. If it gives you a chance to buy something you like and you can buy it even cheaper then it’s your good luck,” the chairman and CEO of Berkshire Hathaway BRK.B, added.

In his annual investor letter over the weekend, Buffett said equities would outperform bonds for years to come due to low tax rates.

“If something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low-level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments,” he said. Full Story

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