The Safest Stock I Can Find Right Now (and How to Buy It)


Editor's Note: Keith wrote this article before Boeing reported earnings on Oct. 24. The company did, in fact, "blow the doors off" expectations, raising earnings and revenue guidance for the year.


I've been as steadfast as I've been consistent.

The "dead cat bounce" others claimed would turn into a more substantial rally two weeks ago was nothing more than a head fake. "There's still more downside ahead," a comment I repeated Oct. 22 during an appearance on Varney & Co.

At issue?

Sentiment.

You almost never hear about that from Wall Street.

But you should, especially this time around...

You see, this earnings season is NOT about the numbers. Contrary to what most people will believe, it's the commentary that will make or break your bank account.

We've known this was coming for weeks – months, actually – so we're well prepared. Sadly, though, millions of investors have gotten caught flatfooted with each new leg down.

The Dow dropped 500 points early on Oct. 23, following disappointing earnings from Caterpillar Inc. (NYSE: CAT) and 3M Co. (NYSE:MMM). It's also the fifth straight week of declines, and puts the major indices down at least 5.8%, as I type (on Oct. 23).

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Caterpillar led the bear-brawl by noting that manufacturing costs were higher because of higher material and freight costs, which is what most people were bracing for. What they – the big traders – had not counted on, though, was the accompanying narrative that material costs were directly driven higher by rising prices and, of course, tariffs.

3M's numbers were pretty straightforward and much the same story... lower quarterly earnings and revenue expectations. Here, the bogeyman was lowered sales growth.

From there, it was a short hop, skip, and a jump to bank shares and tech stocks as the selling accelerated.

There are three key takeaways:

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  1. Caterpillar's narrative very simply tells the story everybody knew was coming but hoped would never be told: We're getting further away from a trade deal with China and further into a global trade war.
  2. 3M's narrative builds upon this theme, but latches onto "sales," which, in turn, speaks to fears of a global slowdown.
  3. And tech stocks... they're all about valuation, meaning the selling is directly related to the willingness to pay high premiums for given stocks when interest rates are rising.

In plain English, the markets are simply adjusting to risk.

So, What's Next?

Technically speaking, the S&P 500 just took out the October lows, as I expected they would. A close above that with a strong finish to the week would set the tone for higher prices and a rally ahead.

But if prices cannot "catch a bid" – meaning tech stocks climb and financials stabilize – the next stop is somewhere around 2,630 to 2,640, or roughly 3.66% lower from current price action, as I write.

Fundamentally, it's certainly possible to turn things around.

We've seen this kind of market action before, and each time, navigated through it with flying colors.

Roughly 32% of the S&P 500 have yet to report and, as I noted earlier, I'm expecting The Boeing Co. (NYSE: BA), Microsoft Corp. (Nasdaq: MSFT), and Visa Inc. (NYSE: V) to "blow the doors" off earnings when they come in. That will go a long way towards re-establishing the focus on fundamentals that is badly needed – and sadly missing – at the moment.

In the meantime, though, what I want you to do is go shopping.

Never forget that "buy low, sell high" is how this game is played and how you line up for big, consistent profits in all kinds of market conditions.

I know it's hard and it takes nerves of steel, which is a comment echoed by Fox Business anchor Stuart Varney when I offered a similar perspective during a "phoner" on Oct. 23's show.

Those things go with the territory.

However, doing so is exactly why Warren Buffett is who he is... one of the world's richest men. And why he prefers to buy into unsettling conditions when he can.

It's why the legendary Sir John Templeton made billions buying at what he called "points of maximum pessimism."

It's how the great Jim Rogers knows how and when to make a move when "everybody" understands something to be true. He says bluntly and simply, as is his style, you "wait for somebody to put money down in the corner... then go pick it up."

Today, I think that's the case with Boeing.

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The company's shares are down to $350.65, or 11.07% below its 52-week high, as I type, despite the fact that total Q3 defense sector growth will likely top 16.8% year-over-year against top-line revenue growth of 6.8%, according to Zacks Aerospace Sector data.

As of the company numbers kicking off this year, they had a huge seven-year backlog, loads of key contracts from the Pentagon, and key allies – as well as being a key player in international armaments markets. In other words, Boeing's customers will NOT stop spending.

At $350 a share, it's expensive, but there's nothing that says you have to be "all in" – meaning buy every last share you can get your hands on with every last penny you've got.

Days like Oct. 23, and months like this one, where everything is trading lower, are tailor made for Dollar-Cost Averaging - a favorite Total Wealth Tactic of mine for turbulent times and slightly different from its cousin, Value-Cost Averaging.

Briefly, here's how it works.

Let's say you automatically send $300 every single month toward stock XYZ. In November, it's trading at $50 per share. So, you pick up six shares.

In December, a geopolitical situation erupts, and your stock is trading at $30 per share. So, you get to pick up 10 shares.

Next month, the stock doubles, and now trades for $60. Sticking to your method, you now pick up five shares.

You now own 21 shares, having spent $900 total over three months.

Now, here's where the "magic" of Dollar-Cost Averaging comes in: If you'd invested that same $900 at the initial month and stock price, you'd only have 18 shares, compared to the 21 shares you have today.

Plus, that money was split up over a three-month period, so you had your capital in the market at considerably less risk than you would have had you put it all in at once.

In closing, I still don't believe the selling is over.

Traders are scared of their own shadows at the moment. Until that psychology changes they're going to err on the side of selling too much, too fast.

Believe it or not, that's great for your money because it gives you an edge when you confine your buying to the world's best companies, and you use a powerful Total Wealth Tactic like Dollar-Cost Averaging.

I will be with you every step of the way.

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The post The Safest Stock I Can Find Right Now (and How to Buy It) appeared first on Total Wealth.

About the Author

Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.

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