We need a gloom index. Just an amalgam of names that encompass the gloom and can be bought every time we feel gloomy, which, sadly, is pretty much every day.
What would fit into the gloom index? What would give us multiple single stock risk, in order to not run afoul of the ETFs that scare us about single stock risk? I have some ideas. Let me tick down some possibilities.
First, Caterpillar (CAT) . People just reach for the sale button on Caterpillar's stock every time they feel gloomy. It's such an easy one because the company, like it or not, makes machinery that gets used more in a globalized, synchronized bull market.
I like this company very much. It's never done as well as this. But if the prevailing news stories are about earnings peaking, this is the one that must peak to make the narrative whole and robust.
Boeing's (BA) stock is always in sync with the global gloom. It simply cannot advance on days marred by trade talk and the notion that Trump -- like him or hate him -- has singlehandedly wrecked world trade with his 25% tariff on steel and 10% on aluminum. It has a special place in the index regardless of how many times management traces out the demand or how many times I say that China needs it more than it needs China.
3M (MMM) is a repulsive stock to many because it is believed to be totally adrift in a turbulent Trump spurred tsunami that's bringing down its earnings every day and twice on Sundays. It is a total pariah and belongs in any glum index.
So does GE (GE) . Here's company that is perceived as being wrong in everything it does. Power's horrendous and when they lay off people it is a sign that it is even more horrendous than we thought. With most other companies it would be a sign that the company is taking action. Nah, not with these guys. The fact that they've done nothing with oil so high? A sign of their intransigence. Their health care unit spurned a $20 billion bid from Danaher (DHR) . That's preposterous. The debt. The long-term care tail risk. The pension issues. The lack of capital coming from GE capital. These are all just nightmares that make it a perfect entrant to the Gloom index. Just wait until it cuts the dividend.
Somehow Johnson & Johnson (JNJ) has gotten into the gloom scenario Perhaps because it has big exposure to a weak dollar? Perhaps because people feel its eight big new drugs aren't big enough? Perhaps because it is a steady company when people don't want steady?
Citigroup's (C) so gloomy. Nothing it does helps it. Everything it does hurts it. There's no two ways about it This stock wants to go down as it is considered to be a bank that has all the worst exposure everywhere. Does it matter than its prospects both overseas and domestically remain strong?
Goldman Sachs (GS) is a total gloomster. It is simply the kiss of death, a virtual basket of sadness and negativity where everything that it does is regarded as wrong. It's amazing how the best could be the worst, but it is deeply involved in the zeitgeist of gloom.
Let's lump in Lennar (LEN) . We know that world trade has to hurt Lennar because it needs lumber. That makes it one for one with world negativity. There aren't a lot of houses being sold anyway and higher rates kill, correct?
Why not throw in Walmart (WMT) . It's a worldwide retailer. What could be worse at a time when Trump is wrecking world trade?
Biotech's so nasty I have to search to which is the worst one? How about Gilead (GILD) ? Celgene (CELG) ? And wont our trade partners delete the drugs from their formularies? That makes a ton of sense.
Now what's the biggest bill of particulars against this market? It's just FAAANG! That's it. That's right all that goes up is Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Adobe (ADBE) -- although it had a down day last week after earnings -- and Alphabet (GOOGL) , which just had a positive note about search come out today.
The idea is not only does the gloom resonate, but it is part and parcel with the love of FAAANG. Oh, and just wait until FAANG gets caught up in a trade war. Facebook will be banned for privacy. Amazon will be prosecuted for monopoly. Apple will be shut out of China. Adobe had a weak quarter and there's a $2 billion fine coming against Alphabet from the EU. It's got to be just a matter of time.
There you have it. What people are thinking. In fact, I am going to go a step further. Since we created FANG. Let's try a new one: GLUM; it's just a ticker symbol, it stands for nothing, just like the stocks themselves.