No matter how bad the COVID-19 pandemic becomes, there will be an "other side" to get to. Chopped-down interest rates and the flood of pandemic money being brought to bear will eventually ignite a "new bull market" once the coronavirus crisis eases.
In the meantime, savvy investors will be able to profit from targeted trades and strategic stock investments - with superb payoffs, says D.R. Barton, Jr., a veteran investor and trader who runs the Straight-Up Profits advisory here at Money Map Press - and who also wrote the best-seller "The 10-Minute Millionaire."
"There's just too much capital not to have an impact - and a big one," D.R. said in a talk early this week. "Now, it won't be a repeat of the 11-year bull market we had from 2009 to 2020. But there will be an 'eruption.' To the upside. It's still too early to say what form, or what duration. Once it gets started, I could see a bull market that runs for a couple of years - from perhaps 18 months on the low end to a two-year to three-year run that takes us back to previous highs."
In an interview with Money Map Press Founding Editor Bill Patalon, who also runs the Private Briefing newsletter here, D.R. detailed his "insider's view" of the coronavirus-pandemic crisis. He shared:
- The one trading strategy he believes will deliver the biggest profits right now.
- The best way to restart your investing program.
- His predictions of "what comes next."
- The "signals" to watch for that will indicate progress in fighting the virus pandemic.
Here's D.R....
A "30,000-ft. View" of the Pandemic
William Patalon III: Let's just jump right into this, D.R. And let's get started with your high-level/high-altitude view.
Weeks into this mess, we're still seeing stridently divergent viewpoints. But having worked so closely with you over these last five years or so, I'm interested in what you think.
What does this all look like from, say, 30,000 feet?
D.R. Barton, Jr.: That's a good way to put it, Bill - a view from 30,000 feet. And that view, in my estimation, is concerning. There's a huge "Reality Gap" still - and it's widening. At one extreme are the bulls. They said last week was the bottom and that stock prices will head up from there.
At the other extreme are the bears - the fearmongers - the people who are saying 150 million will die worldwide.
So here it is - you've got these two, extreme conflicting forces, with little agreement in the middle. And that's been causing tremendous confusion.
This new stance from Washington - a relaxation on the whole "back to reality by Easter" was a step in the right direction. Because there's just no way that's going to happen - the "real" reality is that there's still some really bad news to come.
WPIII: Okay, well let's get back to the stimulus - which is where we started this talk. Is that part of this "bad news?"
DRB: Not at all.
Before we talk about this stimulus program, let's get a bit of perspective, and compare it with others in recent history - specifically, the one in the late fall of 2008 and spring of 2009, followed by the outlays we saw in September/October of 2011.
Remember, in the 2008/2009 stretch - amid the mortgage meltdown - that stocks went into a free fall. Then remember how strong stocks rebounded after TARP (the Troubled Assets Relief Program), and the rounds of quantitative easing.
That was followed by the stretch in 2011, which started with two big market drops in early August 2011, when S&P downgraded the U.S. debt rating - at the same time we were dealing with the European debt crisis. Big losses in September capped off a quarter where the S&P 500 dropped 14%. More quantitative easing followed, and the S&P 500 soared 11% that October.
This latter case was backdropped by a pretty robust economy - as was true before the coronavirus pandemic reached U.S. shores.
WPIII: But you're not anticipating that kind of big bounce-back here, are you?
DRB: The longer-term outlook isn't bleak. But I don't see a similar bounce-back in the near term. I don't think we've seen the worst of this - not by a longshot.
I suspect we've yet to see the big numbers I'm anticipating from India, Bangladesh, and Indonesia.
Once that happens, I believe it will take stocks down. We'll see substantial volatility - for sustained stretches.
Stocks will find a true, lower bottom - by virtue of a true "capitulation" on the part of investors.
We haven't seen that yet.
WPIII: So despite what some bullish traders are saying, the historically steep sell-off we saw over the past month wasn't a capitulation move? That wasn't the bottom? And traders who are saying the rebound is the start of a new upward leg are not correct?[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
DRB: I just don't see how that can be the case, Bill. I mean, just look at the headlines: We're very close to overwhelming - absolutely swamping - the healthcare systems in places like Seattle, New York, New Orleans. It's just not slowed down yet.
We just didn't get ahead of this. We didn't take the extraordinary steps taken in areas of China or South Korea.
Now, there are lots of reasons for this - for one, it's undisputable that China underreported its numbers. By a lot. I'm talking 2x or 3x - or more.
But there are other reasons, too.
Here in America - because of the nature of our society - the isolation has been more voluntary. There's lots of unrestricted movement within our boundaries. And it wasn't taken seriously by some from the beginning.
The net result was that we failed to get out in front on this. And that cost the healthcare system valuable time.
It also created that "Reality Gap," which persists even now - hence the lack of a true capitulation sell-off.
WPIII: Okay, so what would constitute a "capitulation move?" Where would that leave us?
DRB: Well, prior to the rebound we had, stocks were down about 35% on a peak-to-trough basis.
For me, I think a true "surrender" sell-off would leave us down 50% - again, measuring from the S&P's record peak in February. We're not there yet.
WPIII: That's heavy stuff.
DRB: Agreed.
WPIII: That brings me to a key question, then. Since this capitulation would be triggered - at least in part - by a fuller understanding of the "real" pandemic situation at its worst... in your opinion... just how bad does this get?
DRB: Look, I don't want to be a fearmonger, either. And this isn't going to get to "end-of-the-world catastrophic."
At the same time, though, I must tell you that I probably have some context that isn't part of the mainstream pandemic news "narrative."
WPIII: That's one byproduct of the position you have...
DRB: It is, Bill. The fact is I've been doing this for a long time - a long time - and that gives me a perspective others don't have.
Like most veteran traders, I've got an array of contacts across many different key industries. You have to have that to be successful.
The sectors run the gamut: Manufacturing. Chemicals and specialty materials. Financial services.
WPIII: We've talked about this "network" before - and you've shared "insider" stories from each of these sectors.
DRB: That's right, Bill. And I mention the contacts again here because one of the sectors I'm connected with is healthcare.
And what I'm hearing - and I know this to be fact - is that there are "stories" that aren't making the news. I know there are healthcare facilities where workers are being told - ordered - to stay off social media, to not share what's "really" happening. I know other operations where the key doctors and health officials have one N95 mask.
Not one mask per patient.
Not one mask per day.
Just one mask - period.
And you have to wonder whether the "public storyline" will remain as restrained as it has been if we get to the point where there are so many COVID patients on ventilators that patients with other afflictions start dying because they can't get access to that kind of life-giving equipment.
WPIII: As a former journalist and current newsletter guru myself, I see exactly where you're going with this. Your point is that there will be a sudden shift in the overarching pandemic narrative - and that shift will be decidedly negative.
DRB: Correct. We're in uncharted territory - and by that I mean we don't know what to expect. We actually still don't know where we are in the pandemic continuum. So when the narrative shift does come, it will be so sudden in timing and dramatic in scope that it'll be positively jarring to traders.
We haven't been able to get a leg up on this. It's not slowed down yet.
One thing we can hope for is that, like influenza, it's seasonal, so it scales back with the weather.
But we also have to be more aggressive than we've been. And whether that means some sort of forced isolation is in the offing... Well, that remains to be seen.
WPIII: What does this mean for the economy - and for the financial markets?
DRB: Obviously, with my belief that we've yet to see the worst of the pandemic, we're only just beginning to see the damage that will be inflicted on the economy.
But unlike the ardent bears, I just don't see the economy or the markets being put down for the count.
I don't see a "Great Depression II."
There's just too much money - too much stimulus being pumped into the system.
If you go back to 2008-2009, TARP was authorized to be $700 billion - but actually ended up being about two-thirds that. QE, which played out through 2014, injected more than $4 trillion - actually, I believe it was $4.5 trillion - into the financial system.
This could be bigger - or at least compressed into a much shorter time frame.
The $2.1 trillion "relief" stimulus actually followed two earlier "opening salvos" - an $8.3 billion healthcare infusion on March 3 and a $100 billion employer-focused package on March 18. And there's already talk of a fourth round of relief funding - based on the belief that the pandemic will persist past the eight weeks of payroll coverage parts of the big stimulus package will provide.
WPIII: And don't forget the central bank rate cuts.
DRB: Exactly, Bill. When all's said and done, you're probably talking about $4 trillion - or roughly a full quarter of U.S. GDP.
There's just too much capital not to have an impact - and a big one.
Now, it won't be a repeat of the 11-year bull market we had from 2009 to 2020.
But there will be an "eruption." To the upside.
It's still too early to say what form, or what duration.
Once it gets started, I could see a bull market that runs for a couple of years - from perhaps 18 months on the low end to a two-year to three-year run that takes us back to previous highs.
WPIII: But until the bull starts running...
DRB: ... You can anticipate a volatile and uncertain stretch.
And I mean very volatile and very uncertain.
This is not a classic technician's market.
WPIII: Earlier in our talk, I mentioned that you are one of those rare pros who can succeed as a trader and as an investor. Is this a market you can trade?
DRB: It is, Bill, provided you stick scrupulously to a certain style of trading.
In a market like this:
- Your trades have to be short-term.
- You have to be agile - and adapt to what the market gives you.
- And you have to be in-and-out - and repeat that pattern over and over.
WPIII: Is this a market you can invest in?
DRB: Again, Bill, the answer is yes. But again you have to embrace a certain mindset - which actually is the approach you advocate to your Private Briefing subscribers.
WPIII: The "Accumulate" strategy.
DRB: That's right.
I mean, can you invest in Microsoft Corp. (NASDAQ: MSFT) at, say, $140 a share - and add to it on pullbacks - and be confident that you'll come out the other side and go on to do very well in the stock because of its business model, and all the growth businesses it's in?
I'd have to say yes. Absolutely.
If your goal is the creation of meaningful wealth - and if your time frame is a long one - then I think you're fine to buy in small blocks whenever you have the chance.
As I said, Bill, I know this is your mantra in Private Briefing, and I think it's a fine one. Identifying good companies - especially those that stand to gain from the changes that are sure to come out of this - and investing with a long-term, wealth-focused mindset is a great way to navigate the uncertainty and volatility and to come out well on the other end.
WPIII: And you believe those pullbacks are coming... one that'll put us at a peak-to-trough bottom that's down 50% from the record highs hit early this year.
DRB: I do.
As I said before, we just didn't keep people away from one another early in the outbreak - as the governments did in other countries. We were much less forceful about "social distancing" at this earlier point, which is why the virus has continued to spread.
I'm here in Delaware. And just an hour and a half from my doorstep, New York has fallen.
The Big Apple has become an epicenter for the pandemic. People go into the city every day to do business. Every night they go home. It's a global centerpiece for "essential jobs."
And there's no "wall" to keep it contained.
And we are just not doing what we need to do to contain this. We've kept stores and restaurants open. We haven't prohibited travel from afflicted areas or between states.
We've lost the ability to test and separate - that day is long gone. It's going to take new strategies, new solutions.
And it's important to remember - above all - that we will come back from this.
That I fervently believe.
WPIII: Thanks, D.R.
DRB: Happy to do so.