While everyone was getting amped up at the Superbowl between the Kansas City Chiefs and the San Francisco 49’ers traders & investors we’re clenching their buttholes when futures open this week. This butt-clenching was in anticipation of the Chinese market opening for the first time in a week since the Coronavirus has gone from a blip & a dip to widespread fear. Let me be clear about what the fear is and what it isn’t in my estimation.
Let us start with what it isn’t and that is fear of a mass casualty event in the United States. For this maybe we need a little perspective in realizing that while there have been a number of deaths associated with Corona it pales in comparison to deaths from the flu in the US alone, which as it stands is about 10,000 people. Corona on the other hand so far is about 300 as of last reported by the Guardian, a number certainly to grow. The point being of all of this is if we were terrified of dying from Corona that fear would clearly be misplaced when we compare it to the Flu.
What is the fear really about then that has spooked Wall Street? Simply put, it’s a fear of productivity in China. Wall Street does not care about anything except numbers on a screen, PE levels, beats, misses, and iron-clad prenuptial agreements. If people invested in morality & against companies that killed people with its products or services Lockheed Martin, General Dynamics, Coca Cola and McDonald’s wouldn’t have much of a shareholder base. Bottom line is, the market, the traders, investors you the reader and me the writer all want our investments to go higher despite the likelihood that we all value human life.
China with & its home-grown Coronavirus poses a direct threat to the greed all of us grapple with because as they say “only the real-ist know” that we are all bit players in a globally capitalistic machine and China has a major role in that machine; cheap labor. Disrupt the labor force and supply chain and the ripples are far-reaching, impacting everything from iPhones to energy & everything else that might be made in China.
My Dad once said to me when I was debating staying in college a bit longer & adding a major “graduating college in 4 years is like leaving the party at 9 o’clock,” stocks at all-time highs kind of make me think about those pearls of wisdom these days because you also don’t want to stay at the party too long and be stranded with no ride home. In the month of January companies like Apple (AAPL), Tesla (TSLA), Microsoft (MSFT) & the S&P 500 (SPY) have all hit all-time highs along with the Dow Jones Industrial. Commentators, traders, short-sellers, and investors have all been scratching their heads with the two questions of “how high will these continue to go & why are they defying gravity?”
So what should individual retail investors do? I’m of the opinion that everyone saying don’t worry is secretly telling us that publicly & hitting the bid simultaneously because at the end of the day when the bow breaks it will be lightning quick & the people least prepared will be the ones that get hurt the most. As they say “If you seek peace, plan for war,” this means being disciplined and waiting for shakeouts to happen all around you while restraining yourself from buying the dip. Also, be positioned for the inverse trades, these are the ones that would benefit from everything going to sh*t like energy and the VIX which does better when the market is taking a nosedive. You can also protect gains with put option protection, but only if you know what that means and the mechanics of how that works.
Now since you’re on Marijuana Stocks I’d be looking at Canopy and Cronos right now with the patience of a hunter in the woods. They tend to follow the SPY and the Spy follows Apple which will certainly be the canary in the coal mine for the market. The main reason that I decided to write this is I’d like to provoke some thought and strategy for you the reader as well as I want to get out of doing Sunday chores my wife has for me.
Some things you should know that is positive, China intends to inject $174 billion into the market Monday (tonight our time) as well as limit short selling which could be a positive. What I’m looking for (or hoping for) is a gap down followed by a sharp V type move across the board. An added bonus would be if new data comes out that Corona is getting better because the market being as morally bankrupt as it is will rev up their greed boners and just start buying it all back up. In this scenario, we will be given cheaper opportunities to make some quick coin. In that scenario, I would take the profit while its there because you never know when bad data can hit. I see the next two days as one where central banks and governments want to calm down investors, but if we remember that they are just going to try and dump on us we will be the ones that dump on them instead. That means taking profit as well as taking losses, be quick, stay nimble and have a plan.
I hope you enjoyed this long-winded diatribe, for more diatribes in 240 characters or less you can follow me on twitter @WolfOfWeedSt
Cheers-
Wolf
