The stock market today looks a bit wobbly. More than a bit.
As I write this late Tuesday morning—and mind you, things on Wall Street have been changing by the hour of late—the Nasdaq is down 4.5% in the last two trading days, while the S&P 500 and the Dow have fallen a comparatively modest 3%. Meanwhile, the VIX—a.k.a. the volatility gauge, or more cynically dubbed the investor “fear index”—is approaching six-month highs.
Does that mean the sky will continue to fall and you should sell out of all your positions? No. But it does mean you should take plenty of caution, reduce risk in your portfolio by selling your weaker stocks, and keep way more cash than usual on the sidelines. Our Mike Cintolo, for example, just sold two of the three remaining stocks in his Cabot Growth Investor portfolio, and now has a cash position of better than 90%, an extremely rare occurrence.
Cabot Wealth Network has stayed in business for nearly half a century by advising readers on how to navigate slippery situations like what’s going on in the stock market today. With that in mind, here’s a sampling of what some of our other analysts are saying about the current state of the market:
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Crista Huff, Chief Analyst, Cabot Undervalued Stocks Advisor
“It’s unusual to have two market corrections like this in the same year, and it doesn’t help that the depressed prices are being encouraged by tax-loss selling. I frankly expect a significant January rebound as selling pressure recedes.
“Focus on quality, which abounds in both corporate balance sheets and the U.S. economy. There’s lots of good happening, and every reason to believe that most successful U.S. companies will continue to grow their revenues and profits in synch with the flourishing economy.”
Mike Cintolo, Chief Analyst, Cabot Growth Investor and Cabot Top Ten Trader
“[There are] a good number of recent earnings winners (many of which have been featured in Cabot Top Ten Trader) that are still holding up well, [but] the fact is that the intermediate-term trend for the market remains down and, even if you own the best stocks, no money is being made. Thus, we continue to recommend a defensive stance—preserving capital and confidence will pay off in spades when the next sustained advance gets underway.”
Jacob Mintz, Chief Analyst, Cabot Options Trader and Cabot Options Trader Pro
“We have VERY light exposure right now in the portfolio, and I am not in a rush to add, given today’s carnage. There will be a time to buy, but right now I am going to sit with our few bullish positions and continue to hold our hedge.
“Having a lot of cash on the sidelines, and building a potential buy list is a great place to be when the market is unwinding. And should the market hold near the lows, and bounce, I have several stocks I am ready to buy.”
Last Word on the Stock Market Today
For brevity’s sake, I won’t quote our other five analysts, but the sentiment is pretty unanimous: keep the buying at a minimum, and keep plenty of cash on the sidelines. When the market mercifully hits bottom, you can put it to work, and likely pick up some really good stocks at a significant discount.
How will you know when to dive back in? We’ll tell you!
You can always check the Cabotwealth.com website, which offers fresh market updates and perspective every day. Or, even better, consider subscribing to any one of our 12 investment advisories by clicking here.
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