Following Saturday’s webinar, I received some nice emails from members about my positivity. I’m not sure what I did or said differently, but I am very grateful for all the kind comments. It got me thinking about how much negativity there is out there, and the purpose of this Market Note is to remind you to stay mentally tough.
There’s so much noise surrounding the macroeconomic conditions, the debt ceiling, Fed Speakers, etc. but please keep in mind the news is designed to scare us in order to boost ratings. I’m not saying everything is amazing and the market is going straight up into year-end, but we do have to be open-minded that most of the bad news is priced in and that we’ve already started a new bull market.
I read over the weekend that the AAII sentiment survey has seen 72 consecutive weeks of more bears than bulls (based on its 8-week moving average). That’s never happened in the 36-year history of the survey, and the overall sentiment is worse than the Global Financial Crisis of 2008-2009. Why are the majority so negative? I have many theories, but the main one is too many people are obsessing over macro. In addition, the news and social media are incredibly toxic.
So, I return to my message of STAY MENTALLY TOUGH. Do your best to shut out the noise. Every great market throughout history has been fueled by an invention that’s revolutionized our lives. Examples include railroads, television, airlines, drug discoveries, personal computers, cell phones, and the internet. It’s possible that Artificial Intelligence could be the next innovation that increases productivity and leads us higher over the next few years. For those who are screaming “bubble,” applications like ChatGPT and Bard JUST CAME OUT!!! Also, ChatGPT is the fastest application to reach 100 million users, as it did so in only 2 months.
If I were to title this note, it would probably be “Trust the Pullbacks.” Of course, we will have shakeouts and normal corrections along the way, but I have a feeling the market is anticipating the end of this rate-hiking cycle and the dips will be bought into year-end. My focus will continue to be on the sectors I’ve highlighted in many recent videos, and I will continue to work hard finding you those strong entry points and more ideas that emerge. Also, this doesn’t mean go “all in” tomorrow and go on margin. Stick to the five principles I review with you constantly.
1) Use strong stocks and sector ETFs.
2) Get strong entry points.
3) Use smaller positions if you have trouble with volatility.
4) Keep some cash for the inevitable pullbacks.
5) Manage your trades based on your timeframe and overall investment objectives.
Again, the message is to lean positive and do your best to shut out the noise. The greatest skill you can learn in trading (and in life too) is the ability to manage your mind and emotions. Mental strength is EVERYTHING. Always be working on it and making progress!