Hello investors!
Last week, the S&P 500 rose 5.67%. Between Tuesday and Wednesday, the ETF $SPY skyrocketed close to 12%.
Many investors were buying back in, or patting themselves on the back for having bought the day before.
I have a different view...in this post I called bullsh*t on this run up in stocks (check out the link for the uncensored version).
First, let's go over why stocks rose in the first place.
Trump announced Wednesday that there would be a 90-day "pause" on so-called reciprocal tariffs.
I put "pause" in quotes there because the global tariffs are still in effect, they're just reduced to a baseline of 10% with a few exceptions. One of which was that we actually increased tariffs on China from 104% to 125%.
In response, the market rose 12%...and personally, I think this is a mistake. Hear me out:
Tariffs are not "paused," they are still in effect at a baseline of 10% with a few exceptions here and there.
While many seem to enjoy debating who pays that 10%, I don't find this debate very interesting. The reality is that there is a 10% increase in costs that someone has to pay, and this creates a drag on the economy. The longer these tariffs are in place, the more damage will be done, and the less likely it is we can make up for that economic damage with some sort of "deal."
Side note: are we really dealmaking with 70+ countries? We've all seen how long it can take to come to an agreement with just one or two countries at a time, but 70+?? I just don't see how that's even possible just logistically speaking...but who am I to say...
Here's another set of data points: there were only three times in the last 50 years that the S&P 500 rose 9% or more in one day:
- Oct 21, 1987: The market rose 9.10%. From this day through Dec 4, 1987, the market continued to trend downward, losing an additional ~13%.
- Oct 13, 2008: The market rose a whopping 11.58% in one day. From this day through Mar 6, 2009, the market lost another ~32% in value.
- Mar 13, 2020: The market jumped 9.29% in a single day. I think you know where this is going...this time the bottom was only 10 days later, when the market closed a full ~17% lower.
While these situations were unique in there own ways, they certainly don't provide any support for thinking that we have seen the bottom of this market.
So where's the bottom?
I'll be the first to say that it's impossible to tell...but I have a specific indicator that I will live and die by.
I spent the better part of the weekend drafting a full writeup on it.
I joked that I should charge $100 just for this one indicator...BUT since you're a subscriber, you can read about it for free here.
You are more then welcome to share with a friend. They might thank you later...
"F*ck it! We'll do it live!"
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Every Friday at 12:30pm PT, I'll be going live on YouTube to cover the last 30 minutes of trading for the week and to answer any questions you have.
Last Friday was the first episode, and we had a blast. Viewers got their questions answered in real-time, including where are currently tracking compared to my Buy the Dip Indicator, whether Nvidia is worth buying, my thoughts on Gold, and plenty more.
Did you miss out? That's okay!
Come join us on your lunch break this Friday at 12:30pm PT!
Wrapping Up
Will the market go up or down?
No one knows, especially me.
My goal is simply to outpace inflation and grow my net worth so that my $100 is still worth $100 of buying power (and ideally a lot more) in 10, 20, or 30+ years.
If that sounds good to you, then you're in the right place.
And don't forget, you can always reply to this email directly with feedback or questions, or join the livestream on Friday afternoons.
See you when I see you.
-Brian
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