New Stock for the Next Big Lift; Your Ultimate Alpha August Update
If you get a chance to meet TradeSmith strategist Jason Bodner, one of the first things he'll tell you is that he's an optimist by nature.
And given that he's a one-time Wall Streeter – meaning he's seen how the "sausage is made" and has observed the nasty tricks put to use in the investment-banking world – his upbeat nature might seem surprising.
Jason runs our Quantum Edge services here at TradeSmith.
And he's good. Extremely good, in fact.
So his optimistic nature isn't some attempt to block out the things he saw and heard on Wall Street. He's not an investment Pollyanna. And he's not a market "Perma-Bull."
Jason is the consummate pro. And his innate optimism is fact-based.
For instance, Jason will tell you that it's a fact that stocks go up over time. To be sure, bull markets are slowed or stopped by corrections, and eventually halted by bear markets.
But it's also a fact that those bear markets make markets healthy again.
And it's a fact that corrections, volatile stretches, and even bear markets set the table for new bull runs that, over time, propel stocks higher.
It's a fact that August and September, historically, are not great months for stocks. It's also a fact that, historically, the fourth quarter of the year tends to be good for stocks.
After a summer month where stocks were pummeled, all these facts (and a few others that we'll share in a second) are super-relevant. Because Jason says they add up to a fourth-quarter rally that he's referring to as "The Coming Big Lift."
Key among those "good-for-the-stock-market" catalysts:
Inflation has dropped off dramatically – and is closer to the U.S. Federal Reserve's stated 2% target than it's been for several years.
That cooling inflation means the central bank is done, or will soon be done, raising interest rates.
The U.S. economy remains strong (indeed, the American economy has had the strongest pandemic bounce-back of any of the G7 nations).
Consumers (70% of the economy) keep spending, which means companies are still making money.
The feared "earnings meltdown" never materialized – so earnings will keep growing.
That earnings growth will stoke investor appetite for owning stocks.
And with more than $5.3 trillion parked in cash, there's plenty of buying power available.
And once that buying triggers a rally in stock prices, so-called "FOMO" (fear of missing out") will stoke investor ardor, causing prices to climb even faster.
These "facts" will transform Jason's optimistic "Big Lift" prediction into a super-profitable reality.
And he says it'll start soon.
After an admittedly poor first half of the year, we've been refining Ultimate Alpha's holdings. Over the last several months – while remaining fully invested, as per plan – we've jettisoned losers and adjusted the Ultimate Alpha model portfolio to be ready for that Big Lift.
Even with the August rout, several of these moves are paying off. Like the shift into Microsoft (MSFT), up nearly 16.5% since mid-April. Or Sprouts Family Markets (SFM), up 12.9% since late May. We more recently added Intuit (INTU). And, as you'll see here, we also are adding Qualys (QLYS), a cloud-security company that seems undervalued given its remarkable fundamental strength and the surging need for protection in the digital world.
Other recent moves have, quite honestly, been real disappointments in the near-term. Biotech Biogen (BIIB) has disappointed to the tune of 14.3% since we brought it your way in early May. Shares of mining giant Albemarle (ALB) have skidded 12.65% since their mid-June addition – hit by a skid in the price of lithium, the ingredient that still makes the stock a de facto long-term call option on electric vehicles (EV).
We'll keep making adjustments to the Ultimate Alpha portfolio – to put it on a winning track … and to capitalize on Jason Bodner's predicted Big Lift.
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