Are You The Fish?
There’s an old saying in poker that if you sit down at a table and you can’t figure out who the fish is, that means YOU’RE the fish!
The basic idea here is that you need to know your opponents. You need to understand their strengths and weaknesses. You need to know what type of edge you have over them.
And if you can’t figure out what advantage you have over the other players… Or if you can’t figure out who the weak players at the table are… Then you’re in big trouble!
In markets there’s a similar dynamic…
If you’re going to be successful in the market, you often have to be different from most other investors.
You have to know what your strategy is for making money. You have to know why it works. And you have to know who you’re making money from. (Because every time you buy or sell a stock, there’s someone making the opposite trade on the other side.)
Now, I’m not saying you need to know the actual person or institution that’s buying or selling from you.
But it’s healthy to understand what perspective is causing someone to take the other side. And understand why your perspective is more likely to pay off over the course of your trade.
I bring this up because there are a lot of conflicting opinions swirling around about this market right now. And if you listen to the media, you’ll probably come away with the opinion that our economy is on shaky ground right now, and that our market could fall at any minute.
But that’s not what the data shows!
If you look at the cold hard facts, you’ll see that the job market is very strong. That companies are growing profits and are likely to continue that trend for some time to come. You’ll see that inflation is coming back into the market — but at a healthy level. And you’ll see that the Fed is gradually raising interest rates. And those rates are still at a very low level compared to historical trends.
(So there’s not much to worry about with higher rates right now — despite the hand wringing you’ll hear on CNN or CNBC).
I say all of this because I know sometimes I sound like a Pollyanna when I talk about the markets and how things are going really well right now.
My promise to you is that I will always shoot straight with you.
If there are problems on the horizon, we will talk about them. I’ll let you know when I see risks in certain areas and when it makes sense to sell more of your positions and hold more cash.
And at the same time, I’m not going to go with the mainstream media’s “worried bias” right now — even if it IS popular to bash this market. Because until the risks start to affect profits and stock prices, our job is to make money from the best opportunities the market has to offer us!
Right now, I have my eye on several stocks that are attractively priced and should benefit greatly from some long-term trends already in the works.
The first comes from the energy sector. Energy Transfer Partners (ETP) is a stock that we talked about two weeks ago during “Oil Week.” A wider spread between the price of WTI crude (the measuring stick for U.S. oil prices) and Brent (the measuring stick for global oil prices) makes selling oil abroad more attractive to U.S. producers.
This is welcomed news for ETP, whose pipelines will be working around the clock (and charging higher prices) to transport oil to coastal shipping ports.
Another stock attractively priced today is Abercrombie & Fitch (ANF).
This teen apparel stock is showing a lot of resiliency!
After falling post earnings — even though their numbers beat expectations — the stock spent the next few days climbing back and has since recouped all losses. This tells me that any pullback for this retailer (and many other retailers with similar business models) will be met with heavy buying from institutions.
If you’ve already purchased your shares of these two companies than great for you! You should be sitting on some nice profits by now. However, if you haven’t, it is not too late because the trends pushing these stocks higher are still in full swing!
Here’s to growing and protecting your wealth!