Payne Points of Wealth Podcast

Market Irony and Where You Don’t Want To Be When the Melt Up Happens, Ep#11

By October 29, 2020No Comments

It seems week after week it’s the same story. A lot of uncertainty out there. Most Wall Street strategists have been negative and wary. Bob, Ryan, and Chris had been very bullish and the market continues to go higher. Bob, Ryan, and Chris continue to be right while strategists continue to be wrong. What’s going on?

There’s a fog of uncertainty that seems to be shadowed by the fact that earnings are starting to get strong. In truth, of the 10% of the S&P companies that recently reported their earnings, 86% topped the consensus expectations. Even though the analysts and the economist continue to be pessimistic we’ve had good economic numbers on a weekly basis and quarterly earnings are off to a phenomenal start. Listen to the episode for more info.

You will want to hear this episode if you are interested in…

  • The news in plain sight [0:35]
  • Is economic growth picking up? [2:04]
  • Elections affecting pullbacks in the market [3:49]
  • Reality… [5:03]
  • Something stocks love [5:54]
  • The irony of right now [7:02]
  • The Tipping Point [9:05]
  • Why we’ve never had a client hold a bond fund [12:52]
  • The best advice you can give anybody right now [13:53]
  • 900 times forward earnings! [15:54]
  • Hidden Facts of Finance [18:06]
  • Past performance doesn’t tell you what will happen going forward [19:53]

Don’t miss the melt-up because you were sitting in cash

The great irony right now is that you may think that by going to cash you’re playing it safe, but in reality, what you’re doing is risking a huge melt up to the upside. Because of low-interest rates and de-urbanization the housing and automobile markets are growing like crazy. We’ve been talking about this trend a lot. In New York City people are leaving and going to the suburbs. Then they need to buy a car, so car sales are up 50% in the last couple of months. So that part of the economy is already cooking.

What if we start to travel again on top of that? It’s almost like it’s going to be the economy on steroids versus where we were in January pre-pandemic. We’re really scared to miss the upside here and investors should be too. You shouldn’t be worried about another big sell-off, which could happen, but realistically we probably won’t see one as we did in March. But what you want in on this year is a huge melt up to the upside. If you miss that move, if you miss that return, that’s basically your next decade of move in stocks. If you want more on this topic and more check out this episode of Payne Points of Wealth!

This week on the tipping point

The best advice we can give right now is that the #1 thing you need to know— the only true hedge in any portfolio— isn’t gold, it isn’t buying puts, it isn’t trading the market. It’s owning high-quality bonds that have a fixed rate of interest and a maturity date. That’s the only hedge we’ve ever seen in 45 years that works, and it works every single time. You want to protect your principal owned bonds that have a fixed rate of return and maturity date and make sure they’re high quality. And be sure you have someone who knows what they’re doing to be certain that they’re high quality! Listen to the tipping point segment for more great tips!

This week’s hidden facts of finance

The best performing stock’s past performance is 100% indicative of… past performance. It doesn’t tell you what’s going to happen going forward. When a stock goes up 100% it typically doesn’t go up 100% the next year. At one point this year, before its stock tumbled, Nikola was worth more than Ford Motor’s $30 billion market capitalization. It now trades at 7.4 billion. The biggest difference between Nikola and Ford is that Ford actually has earnings. Just to remind everybody of the risk in the market, you could have purchased Nikola stock at 80 in June and it’s 20 today.

Resources & People Mentioned

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