☕ Is the bottom in and what’s next?

Howdy! 👋 

Is a rally underway and have we seen the bottom? 

That’s the trillion dollar question this morning with all three major averages in the green. 

As I noted on Varney & Co recently, Iran isn’t exactly known for keeping its word, so I think we’ve got another gasp or two before the markets capitulate. (Watch) 

That’s neither here nor there though. 

The right tactics, the right stocks and the right perspective will get you and your money through thick AND thin in style. 

That’s the part you want to focus on at all costs – pun absolutely intended. 🤷‍ 

Here’s my playbook. 

1 – If you haven’t been buying into the selloff all along, you’re kidding yourself 

One of my mentors drove it into my head years ago that the surest path to profits is to wait until somebody puts money down in the corner of the room… then go over and pick it up. 

Admittedly, I’ve never been the sharpest knife in the drawer, so it took me a while and a lot more missed opportunity than I’d care to admit to really have that lesson sink in. 

I think we’re there – meaning at that point. 

So many incredible companies have been beaten up, beaten down and simply crushed that I think there’s very likely generational wealth just sitting there in the corner, waiting for you to walk over and pick it up. 

Don’t just take my word for it, though. 

Here’s what history says: 

• Selloffs are normal, not rare. Since 1980, the S&P 500 has experienced an average intra-year decline of about 14%, yet it still finished the year positive in 35 of 46 years, or 76% of the time.  
• Corrections are usually shorter than people think. Looking at post-war history, market corrections have averaged a 13.5% decline, lasted about 4.3 months peak-to-trough, and taken roughly 3.1 months to recover from trough back to prior levels.   
• The biggest up days often happen when fear is highest. Roughly 76% of the market’s best days occurred either during a bear market or in the first two months of a new bull market.  
• Extreme pessimism has historically been followed by strong forward returns. J.P. Morgan’s data show that after sentiment troughs, the S&P 500’s average subsequent 12-month return was +24.1%, versus just +3.9% after sentiment peaks. Mine agrees. 

And just in case you’re still not feeling it or your nerves aren’t ready to go back into hiding, here are two additional data points to chew on. 

Imagine you’d invested $1,000 in the S&P 500 twenty years ago and missed just 50 of the best days over that entire time – a mere 0.4% – well guess what? 

You and your portfolio would have missed 92% of the profits that would otherwise be in your pocket. Ninety-two percent! 

My point is the one that most people simply can’t grasp no matter how hard they try because they are so scared. 

The damage is invisible until it isn’t. 

Now for the other stunner. 

The markets have one heckuva lot more up days than they do down days. 

People just get so scared and flustered that they forget that – and you’re not alone if you’re one of ‘em btw. 

Take a hard look at this chart. 

The bigger the downdraft, the more upside there is ahead. 

That’s why you want to buy in however you can even if it’s one share at a time because that’s what you can afford or that’s what your nerves say you can spend. (Watch)  

Keith’s Investing Tip: History shows very clearly that being invested in markets that may not be perfect beats the cost of waiting to invest in perfect markets.   

2 – Gold on track for worst month since 2008 

I hate the phrase I told you so but in this case I did. 

Repeatedly. 

Gold is now on track for its worst month since 2008. (Read) 

This should not come as a surprise to anyone who understands how liquidity works or has been following along right here in the 5 with Fitz or One Bar Ahead®, our monthly research magazine for individual investors.  

And if you’re still thinking you’re going to run to gold at this stage of the game for safety, ask yourself this… why has it taken such a hit precisely when institutions need cash the most? 🤔 

Btw, if you’re working with a financial advisor who didn’t see that coming, I respectfully submit you might want to rethink that relationship. 

3 – Who needs a captain when you've got an algorithm? 

This caught my eye this morning. 

A defense startup called Saronic has just raised $1.75 billion, valuing the company at $9.25 billion, as it ramps up production of autonomous military ships for the U.S. Navy. (Read) 

CEO Dino Mavrookas put it plainly: “We’re seeing a real shift in demand towards unmanned systems that can be delivered at scale and at a fraction of the price point of traditional vessels.” 

MyPOV: USVs are not some futuristic concept anymore. In fact, I am making a new recommendation in the April issue of One Bar Ahead® that ties into this concept. 

Meanwhile, I’m content to stick with another defense contractor working in a related space that’s returned ~524.09% over the last 5 years versus a still plenty respectable ~60.25% from the S&P 500. 

I hope you’ve got something similar in your portfolio if only for the reason that we’ve talked about this investing theme for years. If not, it’s not too late to make a move. 

4 – McCormick just bought half the condiment aisle — still not interested 

McCormick is making a monster bet on branded food. 

The company is acquiring most of Unilever's food business — think Hellmann's and Marmite — in a deal worth nearly $45 billion. (Read) 

Smart adjacency play?  

Sure. They're not wandering off grid — condiments, spreads, sauces, and flavour staples are their whole personality. Hellmann's and Marmite slot right in alongside Frank's RedHot and Cholula. 

Should you buy McCormick?  

You can if you want but that’s a hard pass from me. 

Keith's Investing Tip: The path to real wealth isn't built by owning little chunks of everything like it used to be. Today's markets require that you own bigger chunks of the right companies. 

5 – Buffett comes clean – and I (respectfully) think he’s still wrong 

Investing is a very, very tough business, especially when you do it in the public eye like Buffett has, and I do. 

Unka B said that he sold some of Apple too early, but he wouldn’t buy at today’s prices. (Read) 

That’s classic Buffett, of course. He wants wonderful businesses at a discounted price, and he’s done exceptionally well doing that.  

I see Apple very differently. 

In fact, I submit that buying now could well be one of the greatest bets of the century because I believe that Apple may have already won the AI race everybody else is so worried about. 

Just not in the way people expect. 

If you’re an OBAer, you know why and if not, well, you’ll just have to take my word for it. 

Bottom Line 

Remember… 

Your job as an investor or trader isn't to figure out where the markets go next.  It's to recognize that they're in motion, then act on the signals created when that happens. 

You got this – I promise! 

Now and as always, let’s MAKE it a great day. 

Keith 😀