Morning Brief – March 9, 2022

By Editor•

There’s a good deal of fear in the markets.

Perhaps too much.

Sure, there’s plenty to be pessimistic about.  Russia is still invading Ukraine.  Oil prices gushed above $130, with threats of $300 oil.  Gold is above $2,000.

But we’re starting to see what we always see in times of panic.  

Scared investors are crowding the short side of the market.  

We can see that in the Volatility Index, which spiked to 35 – the highest it’s been since January 2021.  We can also see that by watching put option activity.  For example, Goldman Sachs said about $1 trillion worth of put option contracts were exchanged in a single week in February.

When we see this happen, investors should consider buying the fear.

Just as Warren Buffett, Sir John Templeton, and Baron Rothschild would advise.

In 1939, Europe was just about decimated. 

So, Templeton bought every European stock trading below $1.00 a share and made a fortune. In fact, he bought shares in 104 companies for about $10,400. He would make a fortune.

He taught us to buy excessive pessimism.

Warren Buffett advises that a “climate of fear is your friend when investing; a euphoric world is your enemy.” And of course, we all remember his advice to “be fearful when others are greedy and greedy when others are fearful.” 

Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.” He knew that very well, considering he made a small fortune buying the panic that followed the Battle of Waterloo against Napoleon.  

In short, investors may be terrified.

But historically, that level of fear can lead to big returns.

That doesn’t mean you should throw your life savings into the market at the moment.  But you may want to consider dipping a toe in some of the markets’ most oversold gems, like Apple, Microsoft, Advanced Micro Devices, etc.

 

Markets

  • The Dow is up about 480 points to 33,080
  • The S&P 500 is up about 65 point to 4,234.50
  • The NASDAQ is up about 261 points to 13,528.25
  • Gold prices are down $31.56 to $2,021.04
  • Bitcoin is up 9% to $42,352.89
  • Oil prices are down $3.76 to $119.90
  • The VIX is down 3.61 points to 32.84

Trading Tips

We’ve never paid this much for gasoline.

At the moment, the average pump price is up to $4.14, according to the Oil Price Information Service. That shattered the previous record high of $4.11 set back in 2008.

Unfortunately, it may only get worse, with Russia saying oil could hit $300.

That’s according to a recent Reuters report that says, “Western countries could face oil prices of over $300 per barrel and the possible closure of the main Russia-Germany gas pipeline if governments follow through on threats to cut energy supplies from Russia.”

As a result of higher prices, a number of high-dividend paying stocks have become far more attractive to income investors.  Read more.

Insider Buying: McDonald’s (MCD)

After falling from about $260 to $222.80, McDonald’s is wildly oversold. Even RSI, MACD, and Williams’ %R are over-extended into “overkill” territory.  That may be part of the reason MCD director Catherine Engelbert recently bought 1,000 shares for $244,180 in late February.  The last time she bought shares was in February 2020, when she paid $192,130 for 1,000 shares.

 

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