Mike Cintolo, Cabot’s Chief Investment Strategist: Thanks for writing. Well, we can’t give overly personalized portfolio advice, but obviously the trend of the market and most of the Mag. 7 is pointed down at this point ... though, after the panic selling seen last Friday and again on Monday, the odds are growing that the market is near some sort of low (maybe not THE low, but a low that can be worked off of). Thus, our advice is to take a step in the direction of the evidence, which is bearish – sell some of your positions, or partial stakes of a few positions – but given the panic selling, we likely wouldn’t be selling wholesale here, nor would we be picking the bottom. If it were us, we’d be paring back and then seeing how it goes, possibly selling a bit more if the (Wednesday’s) bounce gains steam.

Clif Droke, Chief Analyst, Cabot Turnaround Letter (and a gold and metals expert): Yes, I absolutely can see gold’s bull market continuing well into 2025 and beyond. Driving gold is a combination of safe-haven demand from the obvious uncertainties surrounding the global trade/economic outlook. Then there’s gold’s currency component, which is pushing additional safety-related demand due to inflation being an ongoing concern.

The development of the BRICS (Brazil, Russia, India, China and South Africa, plus other countries) currency is another major, and overlooked, demand driver. BRICS could especially drive gold substantially higher longer-term if gold ends up backing the new currency, as many have speculated will be the case. And as the BRICS nations’ de-dollarization presumably accelerates in the face of trade disputes with the U.S., investors both at home and abroad might begin to look askance at the dollar and look to gold to hedge against a potentially weaker dollar in the coming years.

As far as can gold continue soaring to prices previously unseen, like $5,000 or $10,000 or even higher, there is a principle that was famously explored decades ago by the well-known market technician W.D. Gann, in which stocks or commodities that crossed psychologically significant “big round numbers” like 1,000, 2000, etc., continue climbing over a period of years until they end up doubling or tripling before they end up completely losing their long-term momentum. He observed that when an asset price crosses above these benchmark levels, it tends to build more upside momentum as investors increasingly pile into the market since “big round numbers” serve as the best possible advertisement for the asset. For instance, bitcoin first hit 1,000 right around the start of 2017, then doubled a few months later that same year, then doubled again in quick fashion and ultimately ended up at nearly 14,000 by 2018.

We saw similar episodes (although on a smaller magnitude) with the major stock market indexes in the late 1990s as one big round number after another was crossed in quick succession. I believe we’re fast approaching the point in gold where its long-term forward momentum is creating a feedback loop that will serve as a further impetus to much higher prices. As to where the gold bull market ultimately terminates, I can only estimate, but I can definitely see $5,000 an ounce gold within the next couple of years.

Mike Cintolo, Cabot’s Chief Investment Strategist: Well, first, I’m glad that holding through the Covid crash (and recovery) worked out – but depending on what you’re investing in, holding and hoping usually isn’t a great long-term strategy. I’m not talking about owning a diversified mutual fund – that can come back, no problem – but select, volatile growth stocks are a different story. Many are still 50% or 75% off their 2021 highs, in fact. That said, as for the here and now, the odds favor (a) we’ve hit some sort of low the market can work off of in the near term, but (b) more repair work will be needed (bottom-building effort) before a sustained advance develops. Thus, we’d be mostly defensive here and are OK selling some broken names into strength in the days ahead, but I also wouldn’t advise selling wholesale, at least at this point. The ultimate goal is to hop on board the leaders of the next sustained advance, whenever that begins.

We’re trend followers, not trend predictors, and it doesn’t take a black-box proprietary timing system to know the trend is down—we’ve been cautious and defensive since late February when the market and leaders first went over the falls, and we remain so today as the market has obviously nose-dived; we continue to advise cash being your largest holding and, if you want to test the waters, to keep position sizes very small.

That said, we’re also students of the market, and there’s no question we’re in the midst of an outright panic—whereas sentiment was sky-high last December (when one long-time market bear publicly threw in the towel and growth stocks were gapping up 40% on earnings reports), the pendulum has swung all the way toward recession/depression fears, with some truly extreme readings (north of 1,000 new lows on the NYSE on Friday and today; 95% of the S&P 1500 below their 50-day lines, etc.) that have a history of showing up near some sort of market low.

That’s not a reason to turn bullish—again, the trends are clearly down—but keep your head up and stay alert should some actual “good news” hit the wires.

Perhaps we’re closing in on a bottom. Maybe it’s still days, weeks or even months away. The bigger-picture question is whether this market crash will mimic the February/March 2020 Covid crash, which lasted all of six weeks (technically, this crash started about six weeks ago, on February 19), or be more akin to the 2007-09 Great Recession bear market, which was a slower burn that didn’t bottom for about 16 months.

The answer will likely depend on whether Trump follows through on all or most of the reciprocal tariffs he’s outlined (and whether Congress allows him to do it), and what happens to the global economy – Goldman Sachs currently puts the odds of a U.S. recession at 45%.

Until we get answers, things will remain volatile for some time.

Unless the bottom has already been made, this will soon officially be a bear market. It is more likely than not that the market will fall below that level. But even if it doesn’t, stocks are unlikely to gain lasting upside traction until there is much more clarity on the tariff situation. And that doesn’t seem likely for weeks at least, and perhaps months.

Because of the extreme uncertainty and headline risk that remains, I am not aggressively buying stocks yet. In fact, several portfolio stocks have been reduced to a “HOLD” rating in this week’s update. That said, there will be buying opportunities. The tariffs are likely to eventually result in lower tariffs on U.S. goods. There are also tax cuts in the works along with intense deregulation and encouragement of energy production.

The market likes those things. And stocks are a lot cheaper. When we get beyond the worst of the tariff uncertainty, the market could be in position to rally.

When the market tanks like this, our emotions tell us to run for the hills. But history tells us it’s the best time to invest.

Since early February, the bears have enjoyed the upper hand in this market as the tariff war continues to unfold. Heading into this week, the market was making strides toward recovery and even had a fairly strong showing at mid-week despite the trade war’s escalation.

Unsurprisingly, the more conservative NYSE stocks showed more relative strength versus the more speculative Nasdaq issues, as the 50 largest-cap stocks on the Big Board outpaced the 50 biggest Nasdaq stocks this week.

Equally unsurprising has been the continued strength of the defensive-oriented utilities and consumer staples sectors as investors continue to prefer safety over speculation.

On Thursday, however, the bottom fell out as investors weighed the potential impact of the latest round of tariffs, and the verdict was far from bloodless. Stocks plummeted in their worst single-day showing since the 2020 Covid crash, with the S&P 500 losing 5% for the day and the Nasdaq Composite dropping 6%.

As contrarians, we’re always looking for the silver lining in the storm clouds, and there were at least two such examples that I found in this storm’s aftermath. The first is that new 52-week lows on the NYSE were at 550. Back in the days before the internet, it was an established rule of thumb that when the new lows printed in the daily newspapers took up at least four columns, it was regarded as a strong sign of a market bottom. That normally meant around 1,000 new lows in a single day, give or take.

After Thursday’s carnage, we’re more than halfway to that level, and it wouldn’t surprise me to see that milestone reached either Friday or by early next week. And while the final price low could still be a few days away, I suspect the market will be in an exceptionally “sold out” condition sooner than perhaps most investors anticipate.

Another potential silver lining is in terms of investor sentiment as measured by the weekly bull/bear polls. Not only are investors still playing defense, but so too are investment advisers. According to the latest data from Investors Intelligence, the percentage of advisers and newsletter writers that are in the “correction” category—that is, they’re uncertain whether the market is bullish or bearish and are therefore noncommittal—is 42%. That’s the highest reading for this category since the major market low that was posted during the summer of 2015.

To be fair, there was a similarly high reading in the “correction” camp in the Investors Intelligence poll back in early 2022. And while the 40% “correction” reading back then did mark a temporary bottom for the market, it didn’t stop the bear market that eventually followed.

As analyst Tom McClellan noted in his latest market insight, this development may not necessarily mean a major low is in place for the equity market, but it suggests we’re getting very close to at least a temporary low that would allow for a worthwhile broad rally—and perhaps an opportunity to scoop up some relative strength opportunities.