There’s a real, clear and present danger with more than $3.3 trillion parked in passive investing indexed mutual fund and ETF vehicles.
If something triggers so-called passive investors into actively dumping index funds they’re loaded to the teeth with, a black swan-like negative feedback loop could send stocks lower and lower and lower.
Here’s how dangerous things are, what could trigger initial selling, what a negative feedback loop would look like, what you need to watch out for, and how to prepare for what could turn into a market crash.
Shah’s been “extraordinarily bullish” over the past several months – and no one knows that better than Varney & Co. host Stuart Varney, who said “no other analyst on television” has been as gung-ho as Shah.
But now, he’s getting cautious.
The markets still want to go higher – there’s no doubt about that. But there could be some profit-taking in the meantime.
On Wednesday, I covered what makes these markets look safer than they really are.
They’re being lead ever-higher by behemoth leadership stocks while the VIX plumbs ever-lower lows. Investors are doing very little hedging. Some of the bricks-and-mortar retail companies we’ve targeted are getting an extension put on their death sentence as they’re being lifted with the rising tide.
But that doesn’t mean that these companies are suddenly better. And it doesn’t mean that the positions you are already in that are preparing for their demise are now worthless.
Somehow, politics have had little effect on day-to-day markets. It’s been driven by better earnings and better growth, (both domestically and globally). We have nowhere to go but up. Institutions have nowhere else to go, pension funds have nowhere else to go… Where else would you put your money?
On his latest appearance on Varney & Co., Shah Gilani gives a month-by-month forecast for the next several months. He’s been right so far, so the smart money would listen to what he has to say. He also covers Apple Inc.‘s (NASDAQ:AAPL) latest move, why he’s sticking with Target Corp. (NYSE:TGT), and how he would play Urban Outfitters (NASDAQ:URBN). Click now to watch…
For months, I’ve been telling you that the markets are headed higher.
A side effect is that they would likely take some of our targeted bricks-and-mortar retail losers higher as well, making those crappy stocks appear ripe for a real turnaround.
That’s exactly what we’ve seen – an across-the-board rally that’s inflating the stocks we know are headed south.
Today, I want to take a deep dive into the market rally, tell you why some crappy retail stocks are going along for the ride, and show you why they will not continue to rise with the rest of the markets.