Wednesday, September 18, 2013

Your Next Buying Opportunity ...

Many investors get frustrated because the market takes off when they least expect it. Then they get so frustrated they chase the market. That's not helpful or productive longer-term. There are ALWAYS pullbacks. And thanks to the miracles of government, those pullbacks are getting pretty regular.

To see what I mean, look at this chart of the S&P 500 ...

(Updated chart)

You can see the last six major pullbacks since 2010 all had a government trigger -- either in Washington D.C. or in Europe. And now we've had this big, long bull run.  Gee, if only there was another made-up government crisis to give you a buying opportunity.

Enter Ted Cruz.

Personally, I find Ted Cruz hilarious.  He was born in Canada, his father fought on Fidel Castro's side in Cuba, and yet he wants to run for President. His personal history is all the things Republicans make up about Barack Obama, and yet Ted Cruz is a Republican, and the far-right of the Republican party is just fine with him. 

And now he wants to shut down the government.  It's true that John Boehner is nominally in charge of the House of Representatives, but Mr. Boehner is very ineffective, and seems to have lost control of the Tea Party wing of his party, which is being led (for now) by Cruz. People like David Brooks say that Cruz is running against his own party, and is willing to push the country into a crisis to do it.

A fight is brewing over the debt ceiling.  Boehner is content to let Cruz lead the Republicans on this one, taking the position that the debt ceiling will not be raised

But what about Eric Cantor, you ask? Surely he'll put a stop to this plan, which is just going to make Republicans look extreme. Nah, Cantor is going along with Ted Cruz's plans, too.

I expect the usual Washington/media histrionics on this totally avoidable crisis. And if history is a guide, this totally avoidable crisis will send stocks lower.  And if you believe that there is more drama than real crisis to the budget battle, that might be a buying opportunity.

Of course, I don't have a crystal ball. I'm just looking at previous chart action as a guide. You'll have to make decisions for your own investing needs.

By the way, if you're wondering about my Nevada trip, I have two more interviews in the can, and I just edited a 14-minute video of my trip into an underground mine. That looks great! But I've asked my bosses if I can post those videos here on the blog or if we'll use them at Oxford Club. So stay tuned.

Today, I'm going to go visit another company. First, I'm going jogging. These mining-camp meals are murder on the waistline.

1 comment:

  1. Yo Sean. I'm with Bill McBride on this. The Republicans don't try to sabotage the government in election years, because people might remember.

    We'll see though. Maybe they've gotten stupider.