We’ve all heard the shocking news by now…
Shortly following news that president Trump’s close aide Hope Hicks tested positive for COVID-19 – after traveling to and from the Tuesday debate with the president – news hit early this morning that both the president and First Lady Melania Trump tested positive.
First and foremost, we want to wish the president and First Lady continued good health. And we wish Hope Hicks a speedy recovery, as well.
This is serious news, and has massive implications for the next few weeks leading up to the election. The president has cancelled key campaign events, and will self-quarantine for the time being.
At bare minimum, this is a huge unknown in an already uncertain time.
But what this means for markets – and more specifically, your investments – is what I want to talk about today…
Don’t Overanalyze the “October Surprise”
I’ve been writing a lot about how political uncertainty impacts the broad market – especially heading into a presidential election. But what I mean by that is how it affects investor’s perception of the market.
Let me explain…
Let’s say there’s a business that’s doing well. It has strong revenues, earnings, and growth. It has a product that its customers are crazy about, and everything’s rosy. And the cherry on top? The big money is buying it.
In other words, it’s an outlier stock – the kind I hunt for every single day.
So you buy it, and you set a comfortable stop-loss to protect your capital just in case something dire and unexpected happens with the company.
The next day, you wake up and look at the morning news headlines. Something shocking, but unrelated to the business, has occurred. The market opens and the stock you just purchased opens down 10% – nowhere near your stop-loss, but a hard loss to look at all the same.
Where does your mind go?
It’s natural for most investors to panic out of stocks when an “October Surprise”-type event hits and it seems like the whole world is crumbling. But selling a quality stock because of a seemingly disruptive news event is almost always the wrong thing to do – especially if it hasn’t hit your stop.
It’s a weak-hands move. It’s what the big money wants you to do so they can scoop up your shares at a discount.
As I write this, I see this same dynamic playing out. When the big news came out early this morning, the futures market tanked. The S&P 500 looked like it was in for a devastating day. And, indeed, it opened lower.
But many of the stocks we follow in Palm Beach Trader… The strong outlier businesses that can weather any storm… traded up on the day after opening lower. One notable example, longtime holding The Trade Desk (TTD), made new all-time highs intraday.
Make Your Game Plan a Long-Term Plan
Unforeseen events will happen. Sometimes they’re scary, and cause anxiety or panic. Sometimes they tempt us to take our chips off the table too early.
But in the end, the best defense is a good offense. I believe in America and the power of American ingenuity and fortitude. That means I believe in buying and holding great stocks when the opportunity presents itself.
If prices fall on great stocks, we always see it as an opportunity to buy. If markets shrug this event off, we hold the best stocks out there to profit on continued good days ahead.
Either way, our long-term game plan is the same: identify outlier stocks, buy them at great prices, and let the big money do the work for us.
Remember, our data predicted volatility coming this month. The big money consistently sells ahead of the election and buys afterward.
With this in mind, our plan hasn’t changed. If we head lower, we go shopping. If we head higher – we keep sitting pretty.
I want you to keep this in mind as we go through the next few weeks. Don’t get scared out of quality stocks that you believe in. Don’t let the mainstream news guide your investment decisions. And most of all, don’t hand off your shares in quality businesses at a loss if you haven’t hit your stop.
Recognizing when the news truly affects your investments, and when it’s simply igniting panic, is crucial. On days like today, I have no doubt it’s the latter.
Patience and process!
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Jason Bodner
Editor, Palm Beach Insider
P.S. The market action today hasn’t shaken me one bit.
That’s because no matter what the market does, I know my system will guide me to the best stocks to own over time.
Even in the recent volatility, our Palm Beach Trader recommendations have held up far better than the broad market. And I expect that to be the case for all my future recommendations – including the one I release next Thursday.
To learn all about my unbeatable system, and how it can protect and grow your wealth in uncertain times, just click here.