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.
Markets Are Oversold, 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.
Selling In Stocks And ETFs Is Way Past Extreme
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:
Five Sector Charts That Make Us Say Wow
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.
If you want to hear my thoughts on current events – check out my chat on Wall Street Unplugged from Tuesday.
We cover a range of topics…and it’s not all doom and gloom. Stay safe and hang in there folks.
This is our moment to buy great stocks
Chris – we couldn’t agree more. Pick your spots. Sound companies will make it out of this.
I am sorely tempted to buy a year’s guidance from you two. Your emails are excellent – well written, interesting analogies, intriguing charts, good layouts, bursting with confidence. But you guys are in Boca! Can I trust you?
Hey Robert!
Thanks for the nice words in your first sentence! We love what we do and work 7 days a week. We are glad that our message is coming across in the way you described.
As far as trust, we can’t tell you who to trust. We live our lives with integrity – and likely our friends and colleagues would say the same if you asked them.
Hey, I was kidding… but thank you for the generous reply. Y’all know about “Florida man, “ right?
Would you give us a few names of marines and direction that an average newer investor can afford? Microsoft and Home Depot (which you mentioned on Wallstreet Unplugged) are way out of price range for a guy with a couple thousand dollars – that wants to get into the market. I hear the experts recommend great stocks of great companies but they cost $150+ a share – how can a beginning investor make $ on only buying 15 shares? Are any of these marine companies $7 stocks? Do I need to buy your monthly subscription to get that level of advice or is that unobtainable? Thanks in advance for your help!
Hey Daniel –
It’s a common misconception that low priced stocks = value. The best stocks out there tend to trade at a premium – year after year. But, every now and then, periods like now come along.
When I started investing, I started with $2000. I was hooked after that. The journey only began then. Try and not think about the price of a stock, ask yourself if it’s a good business.
With the ability to buy fractional shares, never has it been easier to get invested in stocks. That’s a great thing.
There is a reason 5th Avenue real estate is rarely cheap. Would you rather own a fractional share of 5th Avenue real estate during a crash, or some low-priced development with less history of success?
Obviously this is just to get you thinking about things differently – there is no right or wrong answer.
Thanks for reaching out!
You mentioned fractional shares, great idea. Unfortunately my broker ( amtd ! Doesn’t offer that. How do you recommend we so fractional share purchases?
Thanks
Hey Jeff-
There are a few brokers like Fidelity & Interactive Brokers that offer fractional shares.
Some smaller shops offer the capability, too.
These are just for information only – don’t switch brokers if you are happy where you are.