Hi Harvey,
As your excellent collection of stocks under accumulaton show, not all stocks have entered distribution.
There is higher to come.
Look at the semis (which are a huge part of our global economy (and in 2024 experienced double digit revenue growth):
| From: Les H | 4/5/2025 5:25:51 AM | | Read Replies (1) of 29176 | | |
Sector Breadth
_ Apr 4, 2025 Mar 28, 2025 Mar 21, 2025
_ percent stocks over MA percent stocks over MA percent stocks over MA
_ sector (num) 10 d 21 d 50 d 200d 10 d 21 d 50 d 200d 10 d 21 d 50 d 200d |
Semiconductor (56) 0 0 0 2 0 0 5 7 43 18 11 2
Trump is reversing the globalization of the past decades.
The dip is severe, because Wall Street does not like the international commitments they've made to non American corporations.
The big investment banks may have their capital frozen - that would make it more severe like the GFC of 2000, when the banls lost their capital on housing that declned for the first time in American history.
The rest of the world is being forced to play even.
There are a lot of government bureaucracies whose sole purpose is to obfuscate fair trade.
It looks like that game is over when Trump called the game rigged and has ended it with tariffs.
It seems governments must now decide they must subsidize the industries that were cheating or pay the tariff.
To the degree the industries can't adjust and go broke, capital will be lost by banks.
To the degree governments want to subsidize, the capital is being supported.
My bet is: get out of foreign stocks and buy shares in US based businesses that do not do a lot of international business. My bet is the MAG 7 will decline. Their business has had a monopoly on international business due to oligopoly innovation.
Investing in US based infrastructure, road and manufacturing fab builders, commodities for building, US farmers (buying US ag products will be a solution to trade imbalances).
This sell off is more severe, because The Mag 7stocks have had distribution. Those 7 who have had distribution hold an inordinate weight in the indexes.
As the pain of buying overvalued companies impacts the indexes (which they surely will) many will be selling due to fear only. Even great stocks get sold in declines because they still have a bid on them.
If you know your stocks and their resilience to market swings, an opportunity for oversold good stocks is at hand.
Ted always said buy the stocks that resist declines in general market selloffs. With the indexes declining rapidly, those stocks resisting the general market sell off are beginning to shine.
I have a big position in T and it and VZ have had a nice recent run. They've been holding up nicely until Friday (they were actually advancing all week till Friday). I got lucky and sold out of VZ before last week. I'm thinking of paring down my position in T's common. Converting it to Preferred is a way, but it will incur a taxable capital gain to sell a stock that is so far avoiding the decline. I'm watching it closely.
As long as money funds don't go below the par at $ 1.00, I think we're safe.
I worry about Goldman and their past huge diversion into ESG in Europe (which has lost its alure) and VC's who bought up a lot of private businesses may have to hold them longer than they expected. So they sell what's working to raise cash AND WAIT OUT THE GLOBAL TRADE FLOWS THAT ARE GOING TO CHANGE!
It's touch and go, and bad if a couple of big banks get their capital frozen and they won't be bragging about it.
If that happens - it will be bad and take longer and worsen the sell off of equities in general.
JMHO
Bob |
