Don't Make This 'Melt Up' Mistake
Signs of a bottom in China… The 'national team' steps up in a big way… Don't make this '
Chinese stocks are suddenly surging higher...
The rally in Chinese stocks comes after that market fell to a fresh four-year low last week.
The benchmark Shanghai Stock Exchange Composite Index soared 4.1% today, its biggest single-day jump in more than two years. This followed a 2.6% rise on Friday.
What's behind the big rebound? In short, just as Steve Sjuggerud predicted earlier this year, China's "national team" just stepped up in a big way. As Bloomberg just reported...
Chinese stocks jumped the most since March 2016 after top officials moved to shore up the economy and offer support to the struggling private sector...
President Xi Jinping vowed "unwavering" support for non-state firms over the weekend, the country's stock exchanges committed to help manage share-pledge risks, and the government released a plan to cut personal income taxes. That follows a rare coordinated effort from top financial officials on Friday to support what's been the world's worst-performing equity market...
At least 20 brokerages, which are among the biggest lenders to private firms trading on the mainland, surged by the daily 10% limit. Moves by authorities to reduce stock-pledge risks should stabilize the equity market and help lift valuations for Chinese brokers, according to Goldman Sachs Group Inc.
Now, make no mistake...
We're generally not proponents of government intervention in the markets. We believe markets work best without interference.
In addition, the reality is these types of measures typically provide only a short-term boost at best.
However, the last time China's "national team" stepped in back in August, Steve noted that these moves can help solidify a lasting bottom – provided two critical requirements are met:
First, the markets must be convinced the government is 100% committed to its mission. And second, the timing must be good... The market must already be near a turning point.
This weekend's announcement should leave little doubt about the first. And given how incredibly cheap, hated, and oversold Chinese stocks have become over the past several months, you can make a great case about the second requirement as well.
Of course, we'll remind you that while Steve remains incredibly bullish on the long-term opportunity in Chinese stocks, he continues to recommend waiting for the uptrend to return before getting back in.
Stay tuned... We're not there yet, but we could be getting close.
In the meantime, regular Digest readers know we've spent a lot of time discussing the 'Melt Up ' lately...
The reason is simple: If Steve is even halfway correct about a final "blow off" top in stocks, the next year or two could be among the most profitable of your entire investment career.
And this is all the more important when you consider that history tells us stocks could be "dead money" for years – or even decades – once this long bull market ends.
In other words, for many folks, the
However, some folks have asked if this advice to 'stay long' for the Melt Up isn't contradictory...
After all, we've also been tracking plenty of reasons for caution today... The Federal Reserve is "tightening"... Stocks are, by some measures, near their most expensive valuations in history... and there are huge excesses in the corporate and consumer credit markets, just to name a few.
Surely this is the time to be selling stocks, rather than staying long or even buying additional stocks today... right?
Not exactly. You see, what these folks are missing is that this isn't necessarily an "either/or" decision.
There's no inherent contradiction in our advice to invest for the
Our colleague Dr. David 'Doc' Eifrig agrees...
As he explained in Friday's edition of his free Health & Wealth Bulletin e-letter...
Everyone's thinking of timing.
They're wondering when to get out of the market, how long the next bear market will last, and when to get back in... But they're asking the wrong questions...
That's what individual investors miss in every market cycle and every boom and crash.
You see, as Doc noted, the market isn't like a rocket that goes higher and higher...
It doesn't simply have one trajectory up... then down. Anyone who tries to time the market today is likely to be disappointed...
In order to time the market correctly, you have to not only get your sell decision right, you also have to decide when to get back in. And more often than not, the market will whipsaw back upward and force you to either buy back in at a higher price or sit on the sidelines, missing big gains.
It rarely works.
Fortunately, Doc says there's a much better way to invest...
And the way he recommends doesn't require you to guess which way the market will go next. Instead of trying to time the market with "all or nothing" decisions, simply begin to "tilt" your allocations. More from Doc...
It's that easy. Don't ever decide that it's time to sell all your stocks... or load every penny you have into them.
Right now is the best time in the past nine years to reduce your risk and move some of your capital into cash and cash-like investments.
But it's also a good time to bet on my colleague Steve Sjuggerud's Melt Up thesis that the market likely has a final leg upward. Markets do tend to end in blow-off tops that post very generous returns in their final months.
In other words, you should bet on a
We couldn't have said it better...
And again, if you're looking to successfully navigate the end of this bull market, you owe it to yourself to join us for Steve's big Melt Up event this Wednesday, October 24.
During the event, Steve will share the latest on his Melt Up thesis, including a major new prediction for the first time... answer all your biggest Melt Up questions and concerns... and even reveal an active recommendation on air with the potential to return 1,000% over the next several months.
Again, it kicks off this Wednesday, October 24 at 8 p.m. Eastern time... And it's absolutely free for you to join. Simply click here to reserve your spot now.
New 52-week highs (as of 10/19/18): none.
In today's mailbag: Some "
"Here is a question for Steve Sjuggerud that I hope you can present to him before his Melt Up event next Wednesday. While I agree with Steve that if one just looks at history, that you would think a '
"Who on earth would buy stocks in this environment? Quite honestly, I cannot think of a worse time to have a '
"It has been my experience that hedge funds, short sellers and computer algorithms will go out of their way to push this market down as far as possible to get their 'pound of flesh' and the buy-and-hold folks will not buy 'cause of the inclement market conditions. So please tell me where I am wrong? Thanks." – Paid-up subscriber Greg N.
Brill comment: Thanks for the question, Greg. Steve will be covering all of this and more during Wednesday's broadcast, so be sure to tune in. In the meantime, we'll simply say this...
Your concerns are valid. But folks have been making similar arguments since the bull market began nearly 10 years ago.
Time and again, we've seen investors turn extremely bearish at the first signs of trouble.
As longtime readers know, this persistent bearishness is one of the biggest reasons Steve has remained bullish all this time. He's long predicted that this bull market won't end until most investors become extremely bullish on stocks again.
Your question – and those of many other readers we've received – suggest that still isn't the case today.
Could the bears be right this time? Sure, it's possible... which is why we continue to recommend proper risk management strategies. But history is not on your side.
"Good morning, I watched (and watched, and watched) Steve's Youtube clip of him playing "Message in a Bottle." I shared it with my grandson's guitar instructor and some other people. Would you please let Steve know
Regards,
Justin Brill
Baltimore, Maryland
October 22, 2018