As expected, the choppiness in the markets we saw in April will most likely continue into May as well with last Thursday’s surge in the market somewhat reminiscent of a mini blow-off top…I just don’t see any big catalyst once all earnings have been announced for Q1. I think there will be a slight pullback as the markets look exhausted and as the Debt Ceiling talks intensify later this July/August when the US Debt Total Approaches and ultimately passes $30T. While I expect all Republicans to vote against increasing it, and all Dems to vote for it with Kamala breaking the tie again, all it would take is one Dem to change sides and the pullback becomes more severe. But ultimately cool heads will prevail and it should be increased particularly if the pandemic is still around. Perhaps the markets end up trading sideways until COVID is officially over in anticipation of a post-COVID celebratory year-end melt-up. Either way if you’re a speculative day trader, I’d advise now to reduce positions and take gains. If you’re a long-term trader (which Biden is trying to eliminate by raising the LT Capital Gains tax rate), I’d advise just saving cash right now. Market is still sensitive to any external shock and there’s just too much downside risk, even for me. But as I search for Value I’ll give a top 5 of some sorts, just not easy pickings right now…
- Cash (I’d be saving here in case this pullback does occur and then later buy some dips as we exit the pandemic – $50K+ if you can).
- Commercial Real Estate (over Residential right now). Values are rising and interest rates will be rising soon. But in inflationary environments, should it occur, All asset values increase. Lock in a low rate and pay down the principal. It’s like a 401K plan you get to tap into before and if you make it to 65.
- SOXL – Don’t let the semiconductor shortage scare you. That just means that Demand is outstripping Supply. Great problem to have for the industry as the economy continues to recover.
- UGL – Those who have read my posts in the past know I’m collecting gold mines constantly. Have them all over the world. Have no idea why as I really hate Gold as an investment instrument since it has no real alternative use other than being ornamental. But with China and some countries opening their gold markets back up, I think we’re seeing a bottom in gold right now. Remember should inflation kick in, All asset values increase.
- Marijuana stocks – Pick them based on perceived market share would be my advice. That’s about the only legislative item I think may get passed soon and if it does, expect these to start taking off.
Medium Short-Term Risk/High Reward – BNKU, WANT (You could pick them up here, I just like BNKU closer to $40-$45 and WANT $55-$60.)
High Risk/Low Reward – BTC, COIN
Good luck and let’s get India out of COVID…we’re almost there, I hope.