Send The Marines

When things are in chaos, “send the marines.”

That’s exactly what Bill Bowerman (Nike, Inc. cofounder) yelled to the US consul, according to Phil Knight’s Shoe Dog.

This moment of terror occurred during the Olympic games of 1972. The marines came and quickly got the situation under control.

Bowerman later reflected, saying it was the low point in his life.

When things get crazy – you call on the best to save the day.

When markets are in chaos – we buy the best stocks… we send the marines.

It’s a rare thing when we see an oversold market. Yes, the world is turned upside down.

The level of selling is best described with one word, unprecedented.

Below you can see that the BMI has finally reached the green area.

There were 16 oversold periods in 30 years (now 17). Each cycle lasted between 1 and 49 days.

The average cycle was 15 days. Here are the forward returns from both the first day and last day of oversold.

The bottom line is the 1- 3 month return is ho-hum. But, something starts to happen at the 6 month+ area…juice.

That’s what we play for.

Everyone knows it’s chaotic. But, having a frame of reference is helpful.

Red sticks mean more sells in a day. Green sticks mean more buys in a day.

Here are the net buys/sells each day for stocks. What we see now makes December 2018 look tame.

Here’s a look at ETF buys/sells:

Selling in stocks is epic. We measure this on a 5 week moving average.

As selling increases, the index increases.

This is how it looks when we pop the hood.

Here’s discretionary:

Technology:

Industrials:

Materials:

Financials:

Here’s the bottom line – everyone’s life is turned upside down.

The world is in chaos. We are choosing to find bright spots that paint a picture of better times.

I am not a marine – my step-father was.

As a marine, when called upon – you go in and handle business.

I’ve learned the same about oversold markets – it pays to pick up amazing companies…the ones that handle business year after year.

I don’t try and pick lows – I try and make smart investments.

We cover a range of topics…and it’s not all doom and gloom. Stay safe and hang in there folks.