We got a real lesson in why panic is not a strategy this week, and I hope you will take it to heart.
But I don't know if you did, especially given that Monday, the second big down day after Brexit, was the seventh-biggest day of redemptions in the past 10 years, which, of course, includes those ugly Great Recession days, with $9.5 billion pulled out of global equity funds.
I find the statistic infuriating because no matter how hard I preach that panic -- and selling that day was pure panic -- never made anyone a dime, people just can't take it. They don't know what they own. They fear owning stocks. They don't know how to stay put, let alone do some buying.
I am not minimizing the impact of Brexit on stocks in general, but it was right to minimize it for U.S. stocks specifically. The impact on stocks away from the banks, which did get hurt because interest rates went down when they need them higher, was of little significance. However, it was the classic emotional rout, the 5% exogenous decline that, when it runs its course, you had to buy into, not sell, as we tried to do with Action Alerts PLUS.
What were the news cues that it was going to bounce? Not many. Most of the people who came on TV or were quoted just fit the alarmist category.
But the stocks? They told you the story. First to bounce were the FANG stocks, as they are wont to do because they have growth even in a recession, which is the big Brexit fear. Then the recession proofs came on. Finally, when the vast bulk of people realized that Brexit keeps the Fed on hold but bonds give you an even lower return than before the U.K.'s revolution, you got buyers flying in and short-sellers covering from all different directions.
The run's been so good since then that it might even be too good, and for those who had the temerity to come in at the bottom, taking something off the table isn't such a bad idea. Those who haven't bought? You have to wait now. I can't countenance coming in after a gigantic run right in front of what might be a difficult earnings season, given the propensity for the dollar to go higher again owing to Brexit-related weakness and stubborn slowness in Asia and South America.
The only exceptions to the rule? Stocks that still haven't rallied that should, and those are few and far between, although we have a couple that fit the bill that we are buying for the trust right now.
So check your bulletins but don't obsess. Today's seasonably one of the strongest days of the year.
The days that follow? Not so much.