Don't you just feel like cutting and running on a real bad day like this?
Don't you think it would be liberating just to dump the whole shooting match, cash in your IRA, take down your stock exposure in your 401(k)? Maybe you want to dump that S&P index fund to preserve cash, a perfectly sensible emotion?
Sure, but that's the problem isn't it? Emotions.
Whether you are trading or investing, you can't let your emotions rule. When you do, when you take that action that relieves you of pain, it's probably the wrong action. When you get a market-tsunami like this, I am not asking that you get swept up by it, nor am I telling you to surf it, even as I am sure there are some hedge fund managers who can actually accomplish just that.
I am asking you not to panic, because panic never made anybody a dime.
Believe me, I have panicked many a time in my 40 year career on Wall Street and its environs, and I can't recall a single time when it paid off. But I can give a ream of times when it hurt me, cost me money and I found myself cursing -- sometimes a week later, sometimes day later. Incredibly, many times it was just 24 hours later. Sure, there were moments when that wasn't true, particularly during 2007-2009, when we had a secular crisis that almost brought own the republic. It didn't work even as if you waited 48 hours you got better prices. That was a special time, especially bad, and I advised people to take money out, if you needed, soon, because the market wasn't working.
This is not one of those times, though. Admittedly, there is a confluence of horror: A runaway disease that clobbers hospitality, travel, leisure, aircraft, hotels; an election that can't be gamed, because you face the same lack of reliable polls that we had in 2016 and a lack of a safety net of stimulus, because of that election. Washington can't help, because both sides hate each other so much that someone has to suffer, and it might as well be you.
So, here's the drill you have to go through. First, why is the market as a whole going down? The answer? Because the virus has gotten out of control worldwide, which is producing lockdowns in Europe, and could do the same here. In other words, we could go back to March when many a hedge fund manager panicked and almost seemed proud of it, and scared the market into a bottom.
We aren't getting the jeremiads like I would want. But that's OK, as the lockdown thesis doesn't really hold water this time, because only a few states -- and this whole shebang is now run by the states -- would accept a repeat of March. Yes, bars and restaurants may close, but there will not be a statewide lockdown, because it turns out that the transmissions tend to occur indoors when you can't cover your mouth.
Nevertheless, the election looms and unlike the last lockdown, where they paid you to stay home, this time you are on your own.
Second, we try to figure out which are the sectors that should go down in a marketwide trashing and which shouldn't. It's earnings period, so we actually have a good handle on things. We know that a lack of activity in the country will send rates down, which means you can't bottom fish in the banks. We know that there will be less oil used, forget that uninvestible group. We aren't sure if there will necessarily be a recession, because whoever wins on election week, or whatever we want to call a sure-to-be bizarre vote tally, because stimulus will follow regardless who wins.
And what does that leave?
It leaves the five bull markets I flagged, the ones that do not need the stock market to rally. We drew up the list of five bull markets when things were calm and placid and many thought we had halcyon times ahead of us. We put them together not to chase, but to have a shopping list for when the overall market got marked down by fearful people often using futures or exchange-traded funds to drive down or abandon the market. In other words, we put them together for now.
So let's review and see how we would have done or can do tomorrow.
First bull market? 5G. We know that 5G isn't stopped by the virus or by Washingtonian dysfunction. It's too strong. That means you should be willing to buy something that's linked to 5G, a Marvell (MRVL) , which has demonstrated 5G prowess. I like Broadcom (AVGO) , too, and you can go into Qualcomm, (QCOM) , all of which you can start buying with confidence.
Second bull market: digitization. Last night one of the biggest companies on earth reported: Microsoft (MSFT) . Every line item -- gaming, Windows, Linked, and most of all Azure -- was extraordinary. But the always cautious CFO, Amy Hood, who is so good, chose not to present a forecast that was raised dramatically. Why not? I don't know. Maybe she wants to underpromise so Microsoft can overdeliver? Maybe she decided to be prudent. I, frankly, don't care.
Microsoft does not need travel or stimulus or a new president to beat the numbers. I listened all day to people say they can't deliver. I wanted to say, "Did you listen to the call?" They can blow away the numbers analysts have when they report. So, buy it now before they do. Thank you Amy Hood!
Third bull market: hygiene. You pick 'em. Procter& Gamble (PG) just reported an amazing number. It was only down 3% Wednesday. But the great ones don't fall much. You want some risk? Clorox (CLX) reports next week; lockdowns and Clorox are synonymous. How about a special situation? You might want L Brands (LB) , which includes the phenomenally consistent Bath & Body Works: sweet-smelling clean!
Fourth: home renovation. Masco (MAS) just reported an amazing number, $1.04 when Wall Street was looking for 77 cents, this very morning and it is barely up. Been waiting to get into Home Depot (HD) ? Down 5. Did anything go wrong at Home Depot? I don't think so. Lowe's (LOW) is doing its own renovation. I want it a tad lower. See, when you have a list you actually want things to come down.
Final bull market? You can't use mass transit-not enough people wear masks. You don't have to go back to the office now-no boss is that heartless -- so time to move to the burbs. You need a car. You've got the beaten down Ford (F) . You can chose Tesla (TSLA) . Or you can go the other way and pick up some Lithia Motors (LAD) some 50 points off its high.
Now, of course you don't have to do anything that's always an option. You can wait for a bounce and sell some stock so you have money next time.
But my advice? You need the shopping list before the sale. You can't rummage. You'll just buy the wrong thing and waste the chance to get a better bargain on quality merchandise that you would otherwise never get.
(MRVL, AVGO and MSFT are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
