The Best Opportunity We’re Likely to Have…
It’s all the rage just now.
And I’m fairly sure the average advisor is more than a bit petrified of the market at the moment.
In fact, the latest data coming in from BAML (below) could be accompanied with the heavy flapping sound of this black swan’s wings…
I admit to having never seen this before:
Now, let’s think about what this data is telling us – the bearish concerns, dark analyses, terrible news on earnings, et al.
Folks, all the data will be poor for this quarter and the next.
And anyone not already in their underground Apocalypse Now-style bomb shelter will already know this is all going to end poorly.
But have another look at those two charts above.
When you combine the horrible sentiment on all fronts - newsletter writers, analysts, fund managers and now sell-side and advisors to boot - you get only one consensus that suggests everyone now agrees it's bad.
And that herd has moved over to the "safe stuff" - cash, bonds, mattress stuffing, bank accounts…
So, we can surmise the uplift that we’re watching as markets look to stabilize as the likely large institutional flows.
And thereafter the dagger in the heart is likely the "Sell in May" rush, which admittedly may be a little less of a rush given all the selling in March.
So, when was being at zero EVER the right bearish position to have at the time (2003, 2005, 2009, 2012, 2016)?
The answer is that being bearish - and acting that way - when this number was at or near ZERO has never been the correct stance, so long as we kept a long-term perspective in mind.
The Bottom Line
As May comes in and washes everyone else away until such time as “the future looks clearer," the testing stage for support is likely to prepare a foundation from which The New Economy ahead will launch into a long-term pathway.
And that New Economy is driven by The Barbell Economy©.
While nerve-wracking and messy at this point, this is where opportunity is seeded.
We continue to feel that we will now chop a bit and create the trade range that will scare the masses but will also create the best opportunity we are likely to have for quite some time.
The earnings season is going to be heating up by mid-week, with the next three weeks forward seeing roughly 70% of the S&P 500 reporting.
Other than a few stay-at-home names, none of these reports are a) likely to be good, and b) something long-term investors will put much value on.
Ditto for Q2 as well in mid-summer.
The Message: Stay on the opposite side of the consensus.