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Is It All Over?

By Dr. Steve Sjuggerud
Monday, September 28, 2015

Is it all over?
 
Is it time to sell everything?
 
After a record-tying six straight years of higher stock prices, is 2015 the year that stocks finally peak?
 
Stocks lost 11% of their value in August – in just more than a week!
 
Was that massive fall the beginning of the end?
 
To give us some clues about today, let's take a brief look back at the last major bust...
 
The biggest bust in U.S. stock prices that I've ever experienced started in March 2000. In June 2000 – after the Nasdaq Composite Index had lost a third of its value – I wrote this to my 40,000 newsletter subscribers:
 
Investors are intensely bullish right now. I was surprised to find that most of the attendees at the recent [investor conference] were "true believers." They believe that the stock market is the way to make money over the long run – even though the Nasdaq has lost a third of its value...
 
[In short,] there's not enough pessimism in the market for this to be the bottom.

Keep in mind, I wrote that in June 2000 – three months after the market peak. Can you believe that investors were still "intensely bullish" – even after losing a third of their wealth in two months?
 
It's shocking today to go back and read that... I wouldn't have believed it if I hadn't written it myself!
 
Back then, I wrote that more losses were likely... because investors hadn't given up enough on stocks yet.
 
That turned out to be exactly right... It took a while for the stock market to knock out all those "true believers." The Nasdaq Composite Index ultimately lost 78% of its value from its 2000 peak to its 2002 trough.
 
So... does today resemble June 2000? Are individual investors wildly optimistic about stocks – even after the massive fall in stock prices in August?
 
To me, the answer is clear... NO.
 
I don't know how you feel – but I doubt you'd describe yourself as "wildly optimistic" on the stock market today.
 
In the mini crash in August, investor confidence fell to never-before-seen lows (according to SentimenTrader.com). This is more like what a BOTTOM in stock prices feels like, as opposed to a top.
 
Two things happened in last month's crash:
 
1.   Stock market volatility soared and daily price fluctuations hit crazy extremes. But volatility has calmed down somewhat.
    
2.   Investor confidence crashed to a never-before-seen degree. It's now recovering.

These are the two most important things to know right now. And they have historically been incredible BUY signals, not sell signals, for stocks.
 
June 2000 was a much different time than today. Back then, stocks were crashing... but investors were still wildly optimistic.
 
This isn't the case today. Low investor confidence and fear have been the headlines during the recent correction. This is not how stock markets top...
 
So, is this the end? Is it time to sell everything?
 
Based on my two decades of market experience, the simple answer is: NO!
 
Good investing,
 
Steve




Further Reading:

Earlier this month, Steve shared one of the best opportunities for when the market recovers. "Most investors are focused on the U.S. today," he says. "But one of the biggest opportunities isn't at home... It's in Europe." Read his argument here.
 
"Nobody has been paying attention... but after falling an astonishing 25% since last summer, one hated currency is quietly – and finally – starting an uptrend," Steve says. It's a currency bet that nobody's talking about... and it ticks all three boxes in his ideal investment setup. Learn more here.

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
T-Mobile (TMUS)... telecommunications
Vantiv (VNTV)... payment processor
Cablevision Systems (CVC)... cable television
Activision Blizzard (ATVI)... video games
Snyder's-Lance (LNCE)... snacks
Molson Coors Brewing (TAP)... beer

NEW LOWS OF NOTE LAST WEEK
 
Cummins (CMI)... diesel engines
Caterpillar (CAT)... heavy equipment
Deere (DE)... heavy equipment
Potash Corp (POT)... fertilizer
Monsanto (MON)... "GMO" seeds
Cheniere Energy (LNG)... natural gas exports
Yahoo (YHOO)... search engine
Qualcomm (QCOM)... Big Cheap Tech
Macy's (M)... retailer
Kohl's (KSS)... department store
Avon Products (AVP)... beauty products
Garmin (GRMN)... GPS systems
Mylan (MYL)... generic drugs

premium teaser

If stocks were topping, this would NOT be happening today...
 
History tells us this is NOT how bull markets end...
 

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