Stock Market Investing –The Fundamental
Things Apply As Time Goes By
By Andy Carpenter 
You are lost if you have lost hope. And, man, I know it’s hard sometimes. The damn mailman comes everyday. Prescriptions need to be filled. The car’s appetite is out of control. A stupid bunch of celery costs two bucks – the buns are now as expensive as the hotdogs. Everyone seems to have slowed down in an effort to get a real good look at the economic wreck that has yet to be cleared from the road. And, somewhere, in a place we try to deny, fear tries furiously to dig in – to take root. The Blank Portfolio Entry Few people know daily fear in the same manner as writers do. That blank page is not an effing metaphor for glorious possibilities. It is a stark invitation to fail. It is, for that reason alone, why I have always felt a special affinity for individual investors. Calling up your portfolio may not represent a blank page, per se, but it is a record of your efforts to date. Your next trade, however, is a blank page. Now, I can’t imagine a world where every few minutes a stranger runs into my office and screams “No that’s the wrong word,” or “Use this word now and you’ll win the Pulitzer Prize.” And I’d slit my wrists if, as I wrote, a crowd stood shouting stuff like, “The writers market is dead,” or “Here’s the secret word that can make you a fortune as the writer’s market dies.” Yet, that’s almost exactly what happens to investors as they stare at the next blank page in their portfolios. Hundreds of disparate voices clamor for attention in an effort to correct your investment viewpoint. These voices are trying to fill you with the potential for regret… for missing the next big thing. Investment Goals Are Key But, never forget two huge points. The first – 99% of all successful businessmen will tell you that the best deal they ever did was the one they didn’t make. They didn’t yield to their emotions and lose millions on a sweet story that ultimately lacked substance. The second – it is your investment viewpoint, your risk tolerance that’s important. So, I want you to spend some time this weekend, or next week, and figure out what the hell is going on in your financial life… not trying to figure out what’s going on in the markets. That way, if you need income, you know you need a strong mix of dividend paying stocks. Then, if a stock sneaks through all the noise clamoring for your attention, and the story seems good, you can do something simple… check to see if it pays a solid dividend. If it’s not paying a decent dividend, then you have to be honest with yourself and ask, “Why am I deploying money into something that doesn’t fit my investment goal?” Or, you may be an aggressive investor – someone who seeks a faster payoff. Then you have to ask yourself, “Why, other than options, am I even bothering with the US stock market right now?” You need to go global and get into options fast, unless your answer to “why the US” is “it’s way oversold, and I am betting I’ll make a fortune in three years.” Those are simple answers that are easily discovered with just a bit of quiet reflection. Stock Portfolio Crisis Right now, however, the investors with the toughest choices – the ones with the most challenge to their investment style and discipline – are those who hold a portfolio of fundamentally sound, growing companies. These great companies have been pounded in the downturn, too. These investors – the ones who know exactly why they bought – in my mind, are most at risk for a crisis of confidence. After all, they’ve done everything right. Yet, in what seems like much longer than a brief blip in market history, everything has turned out so wrong. It’s like spending years restoring a ‘67 GTO only to have it stolen the day you get it registered. It’s faith shaking to the point where these smart investors may feel the most hopeless of all, even as the may have the best reasons to be optimistic. You see, the truth is, these fundamentally sound investors have greatness in them. They are the kind of investors for whom this market is built. But those are only words. Fighting hopelessness takes more than a quick, “buck up man, things are due to turn your way.” Finding hope takes action.
INTERNAL ENDORSEMENT Just this Once BELIEVE THE HYPE! It was the email that shocked the investment world. One noted investment authority told his readers to take seven huge stock market gains on one day… SEVEN HUGE WINNERS on one day that ranged from 526% to 102%... seven, and on stocks… not options. But that was just the beginning! It now looks to be setting up to happen again this year, too. That’s why you must check out the whole story right here.
What’s So Different About Today? So, here are the facts. Yep, it’s a bear market. It’s not like we’ve never seen one of these before. Yep, the headlines in the news just plain stink… what’s different today is that this is the Internet Age’s first serious economic crisis… the first huge downturn of the 24-hour news cycle… the first significant crap market in the global era. So, the screams of pain are coming from everywhere – all points of the media’s compass. Add into that the fact that the US government has, for the past seven years, tried to scare the hell out of every one of its citizens by convincing them that a loosely affiliated, generally disorganized, band of criminals – aka terrorists who live in caves – have complete access to the shores of the most industrialized and militarized country in the world. And, these 2,000 or so criminals are ready to attack any minute. And, you can now add real inflation into this nasty politically- and media-made stew. But, it’s not like we’ve never seen inflation before. It’s not as if the US hasn’t always had an enemy to fight. Then there is the housing/credit crisis – the failure of deregulation – so banks that made money by lending money no longer lend money. Again, the 24/7 blog, Internet, talk-radio, cable-news-channel media can’t get enough of this stuff. Bad news is their crack cocaine. And every corner of the media is now fighting to get its share of biggest rock of crack the world has ever seen. The media will, however, back off after the presidential election. Because all the bad news it irresponsibly spreads… all the innuendo and lies it spins… is a huge factor in the loss of faith in the US economy. That will translate to lower profits for the big companies. They, in turn, will spend less money on advertising. So, when the media finally finds it has screwed itself, it will back off. Remember, it’s still trying to figure out the tipping point between the 24/7 fear it spews and its P&L statements. To Heck With Hope – Let’s Deal With Reality And this is why the fundamentally sound investors must be licking their chops. Because outside of oil stocks, other energy stocks and basic materials stocks, which are all way overbought (and bank stocks which just stink) every sector in the stock market is oversold and a screaming buy today. This is where investors who do things right have a huge advantage. Blessed with fundamentally sound knowledge, these investors know how to read a financial statement and dig through a company’s annual report to find great companies. They see opportunities when others merely fret and mew about where a stock’s price has been. So, fundamentally sound investors should be salivating at today’s myriad opportunities. In fact, I know a bunch of them, and they are. A Rising Tide You see, one of the best things about being married to Lynn Carpenter is getting to watch up close all the cool things she does for both her Rising Tide Letter subscribers and for her Optionist options traders. Late last week, I lightly proofread another very sharp thing Lynn did for her readers. She took every stock in the Rising Tide portfolio and rated it for how oversold it is. Then, Lynn offered a strategy for playing the stocks. Those ratings ranged from “wait a bit,” to “plenty of time to average in” to “this sucker is about to pop!” Okay, you all know Lynn is a bit more elegant than that. Her list of Rising Tide’s oversolds is extensive and the opportunities are impressive. And, this is not an attempt to slip some marketing copy in here. I simply saw the hotdog getting made; only it turned out to be a NY strip. The buying opportunities in Lynn’s portfolio of 30 or so companies are amazing. And they are just the tip of the market. The Unprepared Investor Will Be Late To The Biggest Gains So look, bear markets always end well before an economy recovers. Smart investors not only know that – they count on millions of other investors not knowing that. That’s why these sound investors, the ones blessed with solid investment principals and foresight, should be licking their chops now. They should feel – as Warren Buffet might say of this market – “Like an oversexed guy in a whorehouse.” Now, that’s reason to hope. Have a great weekend. Andy
P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.[Ed. Note:In the past 10 months Asia Business & Investing subscribers have booked outlandish gains. These recent winners include 562%, 300%, 383% 197% 149% 123%, 102%, 649%, 319%, 179%, 77%, 196% 100%, 126%, 185% and 430%. Find out more about how you could tap into superb gains like these right here.]
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