Millions of investors took part in Monday and Tuesday's panicked selling, and the really sad thing is that they don't have a clue about the opportunity they've missed. As always, that's going to cost 'em dearly.
I don't ever want you to find yourself in that position.
So today, we're going to talk about what they did and why, despite the best of intentions, their actions will set them back years and rob them of the very successful financial future they crave.
Then I'm going to share a recommendation with you that has the kind of windfall profit potential that can more than make up for the latest round of market madness, and keep you on the right track at the same time.
Here's what you need to know.
How to Profit from Panic (and Knee-jerk Reactions)
All three averages got pounded Monday and Tuesday as the markets came to terms with President Donald Trump's immigration edict. The Dow dropped by 01.31%, while the S&P 500 surrendered 0.62%.
At first glance, that's plausible.
In an effort to keep radical Islamic terrorists at bay, the president's executive order temporarily banned U.S. entry to persons from Iraq, Syria, Iran, Sudan, Libya, Somalia, and Yemen until "extreme vetting" is implemented.
In reality, there's something else at work.
Three things, actually.
First, the Dow dropped below 19,800 points with two stocks – Goldman Sachs Group Inc. (NYSE: GS) and 3M Co. (NYSE: MMM) – experiencing a $3.26 billion sell-off alone. Big banking stocks including Wells Fargo & Co. (NYSE: WFC) and JPMorgan Chase & Co. (NYSE: JPM) sold off far more severely than the S&P 500 itself. Tech stocks were more or less unscathed, with the exception of Alphabet Inc. (Nasdaq: GOOGL), which received a 2.55% buzzcut of $26 per share.
Energy gave 2% back, which is almost an afterthought given how irrelevant oil has been lately – but that's a story for another time. And the tech-heavy Nasdaq Composite actually finished Tuesday up 0.55% for the week so far.
My point is that the selling is neither as widespread nor as indiscriminate as the press made it out to be.
Second, Treasurys held steady, with the benchmark 10-year note treading water near 2.488% and the two-year note hovering at 1.216%. This tells me that the smart money isn't giving up.
Remember, the bond market is roughly three to five times the size of global equity markets depending on which indices you count, so the real move would have been out of bonds if traders were going to the sidelines and giving up the proverbial ghost.
And third, a pullback is long overdue. Nothing goes up in a straight line forever, especially stocks. So the fact that the markets sold off a bit just as earnings are beginning to accelerate and Trump's beginning to take action is not only expected, but needed.
Let's not forget that investors were very quick to price in the gains associated with lower taxes, reduced regulation, infrastructure,…
Join the conversation. Click here to jump to comments…
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.
I love money morning.