After the Half: What I Didn’t Say on Halftime Report

Posted on Mar 16, 2021 in Investment Strategy

After the Half: What I Didn’t Say on Halftime Report

Today on Halftime Report, the panel got into a heated discussion about the possibility of a correction. Scott Wapner asked me and I said I believe the market is going higher: GDP looks to rev up 6% or more this year, consumers have pent-up demand, and the government is pushing trillions more stimulus into the economy.

https://www.cnbc.com/video/2021/03/16/why-this-investor-says-the-market-will-go-significantly-higher.html

I’d like to add one more thing to my comments that I didn’t have time to say on the air: I’m ready to buy if I’m wrong.

I alluded to the strategy of buying in a correction when others are running for the exits when I said Josh Brown was exactly right. Successful investors make their stripes, and generate wealth, by having the discipline to do what feels awful. Buying low and selling high sounds great – and it is, but a lot of the time it feels terrible. When prices are falling and, as Jon Najarian says, investors are banging on the doors of their advisors to sell, the easy thing to do is to look at the red on the screen, hit sell, and turn it off.

Successful investors, disciplined investors, do exactly the opposite. When the red appears on the screen (and on the account statements), dogged, disciplined research rules the day. Have the fundamentals changed? What are the long term prospects for a company? How much cash do I have to deploy today? This was Jenny Harrington’s message too. When a stock has reached bargain value, even though it makes you break out in, as one wise investor friend said, “a full body sweat,” you reach for the buy button.

It’s true that markets that fall 10% may fall 20% — and markets that fall 20% may fall 30%. They did a year ago, losing 12% in just a single trading session a year ago today. Many stocks that were hurt that day haven’t recovered, and truthfully some never will. Yet the markets as a whole set yet another intraday high today, and companies with strong fundamentals: balance sheets to endure the downturn and invest in new opportunities, real earnings and real opportunities to grow those earnings, and sound management teams able to respond to emerging threats and exploit unexpected opportunities are thriving.

To reiterate, I believe the fundamentals indicate this bull market has a long way to run. We select companies looking towards a minimum time horizon of three to five years to construct a portfolio that will outperform, while assuming less risk than the market as a whole. I have also been in the business long enough, and have the grey hair to show for it, that I know the unexpected will come. I know for certain that we are one day closer to the next correction. We will be evaluating our positions, the market, and the broader economic landscape to find the bargains in the correction that will rebound into the next recovery.

Because I also know for certain that while today we are one day closer to the next correction, we are also one day closer to the next record high, the next milestone of Dow 40,000, Dow 50,000 and beyond. It won’t be a smooth path to those milestones, but we will get there. We will not sell in despair or buy on blind hope, but will help our clients reach their goals with discerning judgement, methodical attention to detail, and the humility to continually examine our pre-dispositions.

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