What did you think was going to happen?
Did you really think we were going to come in here today and get a deal in Washington for more stimulus and find that the Covid caseload would be dropping?
When you look at the reasons that people are giving for the declines, you would have to believe that everyone who is selling must be an idiot.
Let's take a realist approach: We keep hearing every day that the two sides are talking. I wish they would stop talking, because all they are doing is creating false hope. I believe both sides think that it's a win if the great middle class loses, because they can each blame the other side for the pending catastrophe. I am not a political guy, and I don't want to be involved at all, but it is important to recognize that there may be a stimulus plan someday, but you have to stop investing with the idea that it is going to come to the rescue. There is no stimulus cavalry. There is too much infighting. Don't be Custer; get a gameplan.
Second, let's talk the illness. We have been predicting this wave forever. I would not be spending a huge amount of my spare time trying to get young people to create a mask that more people would wear, if I didn't believe that things were going to get worse. Thank heavens we have such unbelievable entries at xprize.org/mask,by young people, ages 15 to 24. I am confident we will have something that can make a nation mandate possible. With Dr. Tony Fauci, the nation's top public health official, and Dr. Scott Gottlieb, former head of the Food and Drug Administration, talking about a national mask mandate, it's time for everyone to try to do what they can to get people to wear them, especially inside where the danger is thick.
The fact is, though, did we suddenly discover it was out of control? Are you kidding me?
Am I being too sanguine?
Hardly.
For weeks now, I have been recommending to you the bull markets that are created by a pandemic run wild with no help from Washington. But day after day I have said you must wait for the stocks to come down before you buy. Now that they are coming down, I can't tell you that I don't trust my own work. Instead, I am going to suggest to you that you start to put a buying plan into action.
Let's review the bull markets.
One, there's a bull market in 5G. Anyone who was trying to adjust their fantasy line up or watch "Borat" was sorely tested by the speed, or lack of it. That ends with 5G.
Two, there's a bull market in digitization, where companies are accelerating their move from on-premise, which, in many cases is locked down, to the cloud.
Three, we have a bull market in hygiene, in which individuals combat this illness with meager weapons, but weapons none the same.
Four, we have a bull market in home renovation, both do-it-yourself or otherwise. These are stocks of companies that make your work-from-home house more livable. It's the extension of a boom in housing that's caused by the great exodus from the cities to the suburbs and even further out. Remember, this one's about tools and paint, not about homebuilders.
Five, there is a bull market in cars, because mass transit is viewed as too frightening and you can't just use Uber (UBER) to go everywhere.
Now, there are three big fears that face our country: getting sick, shutting the economy down and an election that's not going to be decided on the night of election day.
I agree with the latter. And after 2016, I don't even want to hazard a guess -- and it would be a guess -- about who will win the White House or the Senate.
But I do know that my bull markets will work no matter what, and that's where you want to start putting you money to work.
Now there are always objections that pop up that seem to invalidate the thesis. We know the homebuilders have run too much and we have seen a bit of a slowdown in mortgage loans. We know that the auto companies are faced with a unique set of challenges, from Tesla (TSLA) to imports. The hygiene stocks have roared.
But I, frankly, have to say that you can't sit back and let the market decline, without doing something that puts cash from the sidelines into the market.
So, given that almost every major tech company reports this week, lets tackle the decline in internet and internet-related stocks head on.
As is often the case when you have sell-offs like this, someone can point to something that is wrong, very wrong, that blinds the opportunity.
We got just that this morning when SAP (SAP) , the gigantic German tech company offered what had to be one of the most disappointing numbers and more disappointing forecasts that I can recall. What's wrong? To listen to SAP is to believe that the digitization process has slowed, that deals aren't getting done, that there is finally a cost to tech from this endless Covid nightmare.
I think that's a total misdirection play. It's what happens when the quarterback fakes a run and then passes. You bit on the run if you sold Monday because of this. That's important, because the stocks you might want to buy are all getting slammed off this.
There's a second problem. We have a bunch of analysts that previewed Apple (AAPL) , which reports Thursday. They talked about how CEO Tim Cook has good visibility on the new iPhone and could be very upbeat about its prospects and 5G.
To me there is simply no reason whatsoever for Cook to give any predictions. He's about making the best product there is and customer acceptance will come with that. It's his mantra. His mantra is not to hype. So these comments ahead of the quarter are unhelpful..
So what do you do?:
I think that you can begin to buy some of the most extraordinary companies that are being linked with SAP when, in reality, they may actually be winners from SAP's weakness. I think that's the case with Salesforce.com (CRM) . You might not want to pay up and find a company that's not doing badly in that environment, and for that I would say Oracle (ORCL) .
Or if you can stomach it, why not go with strength. Amazon (AMZN) reports on Thursday. Here's a company with a stock that was barely down Monday. That is often a sign of incredible strength. To overcome the gravitational pull of this market is extraordinary.
Now, before you say, "Wait a second, who would ever buy anything today?" ask yourself about how a very smart buyer came in and actually proposed, at least according to the New York Times, to buy all of Dunkin' Brands (DNKN) . Now many thought Dunkin Brands was already extended, but the firm that's bidding is real smart. I have watched this private acquirer, Inspire Brands, as it bought Sonic and Buffalo Wild Wings and I marvel how they have been spot on in their acquisition strategy.
What are they getting? How about a retailer who can take advantage of the massive amount of now available space, because of the pandemic? How about a company that has put in a huge amount of technology into their stores. How about a company that is surviving while there is no hope for so many smaller competitors now that there seems to be no stimulus cavalry?
Lots of uninformed people selling. One real smart buyer.
So, get comfortable. Rocky week. But we have assembled a a group of five bull markets that are meant for when there is no stimulus coming and Covid rages on.
When the two occur at once, you buy, not sell.
