The dual question I’m getting asked a lot these days is, “Have stock markets gotten ahead of themselves?” And “Is too late to get in?”
My answer – hold on, let me dust off my crystal ball – is…
Yes, they have.
And no, it’s not too late.
Markets here and (especially) in Europe look like they have gotten ahead of themselves. But the surest way I know to lose money in the stock market is by fighting (or “fading,” in Wall Street parlance) the trend.
Bad things can always happen. We know there are black swans out there. But stock markets have been climbing the proverbial “wall of worry,” and most of them look surprisingly resilient.
So what to do? Personally, I’m having my subscribers add to our positions.
The trend is always our friend. Yet I’m ever mindful of thinly trading (low volume) markets turning on a dime.
But waiting for a correction to get in now could be hazardous to your longer-term health.
That doesn’t mean I don’t think we are going to see some profit-taking some time soon. I believe we will. But, as long as the trend remains intact, in spite of markets looking like they’ve gotten ahead of themselves (they are technically “overbought”), I’m more comfortable being long, and adding to positions, than I am trying to pick a near-term top.
However, because we’ve come so far, so fast, now is not the time to jump all in.
It is a good time to make sure you have a plan to add to strong positions that have shown good momentum if we get a correction.
That’s what we’ll be doing… that is, unless there’s a trend change.
Oh, and Speaking of a “Trend Change”…
Congress has been trending towards putting an end to their little “side business” of insider trading.
Senate and House bills are moving forward; but there’s a fly in the ointment. And it’s not just one of those annoying House flies (as in House of Representatives), either.
Although the guy I’m talking about is a House fly, he’s more like one of those green flies that bites the you-know-what out of you.
The only thing that keeps me from going crazy when green flies are out and biting is knowing that, if I’m patient enough to wait for them to land on me and let them start biting, I can usually manage to swat the you-know-what out of them.
That’s just what I’d like to do to GOP Rep. Eric Cantor.
While the Senate passed their version of the Stop Trading on Congressional Knowledge Act (seriously, don’t you just want to swat the you-know-what out of all of them? Check out the name of this bill. It’s as if they’re addressing some other “Congress” – anyone other than themselves) – otherwise known as the STOCK Act (so clever) – good old insider boy Rep. Cantor was taking some of the “sting” out of the House’s version of the bill.
Here’s what has me seething.
It’s not that he plans to bring his version of the STOCK Act to the floor of the GOP-controlled chamber today using a procedure that prevents other lawmakers from voting on amendments to it – though that’s annoying.
It’s that he cut a major provision (there’s your “trend change,” if you were wondering how I was going to fit that in) from the House bill that required the little people who quietly go about mining Washington’s hallways and congressmen’s offices looking for market-moving inside information to disclose their activities, the same way lobbyists are supposed to do under the proposed law.
According to Rep. House Fly Cantor, that provision is just not fair to Wall Street and the maggots who operate what’s become known as the “political-intelligence” industry,.
Did you get that?
Cantor is taking out a provision that makes it illegal for Wall Street flies to adhere to the halls and walls of Washington to pick up inside information that they can trade on.
ARE YOU KIDDING ME?
… Are you sick yet?
I could go on a rant here, but what I have to say would never be as perfect and succinct as what Rep. Louise Slaughter, the House Democrat who has been pushing the STOCK Act for six long years, had to say about Green Fly Cantor pandering to his Wall Street masters.
According to this morning’s Wall Street Journal, she said that the Cantor-backed version was crafted “in secret, behind closed doors, brokering deals for special interests.”
And her killer quote of the year: “How ironic – insiders now appear to be writing a bill meant to ban insider trading.”
You just can’t make this stuff up. But you can swat the you-know-what out of them.