It seems the best investment strategy at the moment is to throw caution to the wind and take a chance.
Experienced traders are entering positions they would never normally pull the trigger on. Perhaps even being acutely aware they are purchasing a “bad” stock (meaning not trading on fundamental news flow or from the usual technical analysis and normal setups), but getting rewarded heavily for doing so.
A stimulus has been given to the average person allowing retail traders to enter the market into any position they like the look of. Buying stocks institutional traders would stay clear of. But the fact remains, these traders are outperforming the hedge funds, fund managers and the “smart” money.
This is a trend that is looking more and more likely to continue.
The institutional buyers are sitting on the sidelines and watching the average investor get rich from 30-40% gains in the shortest amount of time. If they decide enough is enough and consider jumping on the profit train, then June could be an even bigger month than May. If big money starts loading up on these same stocks analysts wouldn’t touch, we could be riding a faster form of transport than a train… all the way to the mooooon.
It may be difficult for our subscribers to think this way. But, what good is it if we follow the most sound fundamental data while not making any money? The key to making money, in any market condition, is to react to (not follow) the price action.
The questions to ask ourselves is this…
Which sector is most consistently providing upside and delivering value day to day?
How can we make the most money in the shortest period of time?
There has been a major bid on growth stocks profiting from the Coronavirus. Stocks that are needed when working from home such as Zoom Video Communications Inc (NASDAQ:ZM), Roku Inc (NASDAQ:ROKU), and Slack Technologies Inc (NYSE:WORK). So far, even with economic reopening, there hasn’t been any indication these stocks are tapering off any time soon.
But we see a real chance to make money from a rotation out of these growth names and into value companies. Stocks such as Bank of America Corp (NYSE: BAC), Pfizer Inc. (NYSE:PFE), Johnson & Johnson (NYSE:JNJ) or AT&T Inc. (NYSE:T). Companies where “smart” and “dumb” money will feel safe to deploy their capital to get away from tech and growth names. The companies where investors who have missed the large 40% run-up from some stocks, can still capitalize on the uptrend in the market. Companies that aren’t close to their 52 week high but are destined to get there.
If you don’t feel like exposing your self to one of these names in particular, there are options to invest in a basket of these value stocks such as the ETF iShares S&P 500 Value Index (NYSEARCA:IVE).
Watch the full interview to see how Future of Wealth Head Trader Lance Ippolito is capitalizing on the price action in today’s market conditions.