Consumers love sales, with one exception. If something you really want goes on sale, most people will rush to buy. When stocks go on sale however, most investors will freeze up, expecting prices to go even lower. Strangely enough, when you see stock prices going much higher, you see many investors get even more interested. This behavior seems silly when you step back and observe it, and it is exactly what hurts many investors. Be prepared for an upcoming “Holiday Sale” in the stock market! Don’t be afraid when the sale comes. Take advantage of it.
While I clearly expect a holiday sale for the stock market, I am not sure which holiday it will fall on. It might be very soon–around the High Holy Jewish Holidays, maybe closer to Halloween or even Thanksgiving. My guess is sooner rather than later. When it comes, I expect a brief 10-15% mark down, not a 40% clearance sale. I think you should treat a 15% mark down as an opportunity to buy; not the start of an upcoming market rout.
It is a good time to make your “wish list.” If there are any companies you wish you could buy shares of at a lower price, the ones you were saying, “I wish I had bought at a lower price,” get ready to buy them when the sale comes. Learn to control your emotions and buy during sales, don’t be afraid of them.
Longs: ARRIS Group, Inc. (ARRS) , Emerge Energy Services LP (EMES) , San Juan Basin Royalty Trust (SJT)
Shorts: NetSuite Inc. (N) , Teck Resources Ltd. (TCK) , AdvisorShares Ranger Equity Bear ETF (HDGE) , Direxion Daily Small Cap Bear 3X ETF (TZA)
By Jordan Kimmel, Chief Investment Officer at Investview, Inc. (INVU).