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Recently, I was pondering something that motivational speaker Tony Robbins talks about quite often…
He says we’re driven by two main emotions…
- The need to avoid pain.
- The desire to seek pleasure.
Out of those two choices, we’re genetically programmed to avoid pain more than anything else.
That same instinct is also why it’s so doggone hard to convince ourselves to buy a stock after a major sell-off such as what we had in March.
It also explains headlines like this one: “Despite the Market’s Breathtaking Rally, Investors Are Closer to Despair.”
As the article notes, when the market rises sharply — and people remain stubbornly pessimistic — that’s usually a good sign (though not a guarantee) that the rally can continue.
To me, last week’s market weakness reinforces that idea.
I mean, I used to be a news reporter. I’m used to dishing out — and hearing — lots of bad news. But it gets too much even for me, many times.
So, I feel it in my stomach like everyone else when all that bad news finally cracks the stock market, and I watch the Dow Jones Industrial Average drop 500 to 600 points in a few days’ time.
But my head is saying: “Wait it out for a bit. Don’t panic.”
For instance, look at what happened with initial weekly jobless claims last week. They dropped below 3 million:
(Source: Bureau of Labor Statistics.)
Now, let’s think about what’s starting to happen around the country now:
Stimulus checks are finally getting into the hands of businesses and their workers. Stores and restaurants are reopening. Vacation plans are being made. Pro sports leagues are starting up.
Of course, this is only a “phase 1 reopening.” Nothing is going back to normal. We may be back in quarantine at some point down the road.
But I’m trying to show you how the stock market can keep rising — taking “breathers” like last week’s decline, to fuel up on investors’ pessimism — before moving higher yet again.
That remains my expectation in coming weeks until proven otherwise.
As for today’s update, I discuss:
- Our closure of our Allergan trade. (3:23)
- Our new June recommendation. (5:16)
- A reader’s question on Liberty Latin America (Nasdaq: LILA). (13:46)
To watch the 16-minute webinar, click on the image below.
(Click here to watch the webinar.)
Click here to read a transcript.
Be the First to Join One Trade
Before I sign off for the week, I’m excited to give you a sneak peek at a system we’ve been working hard on for the past year.
With a one-of-a-kind options strategy, Michael Carr places the same trade, week after week, on just one exchange-traded fund. It’s that simple, and it gives you the opportunity to make double-digit and triple-digit gains in a few days — and sometimes in 24 hours.
In fact, Mike just closed his most recent trade earlier this week, snatching a gain of more than 20% in just one day.
I won’t get into the full details now, but I want you to be one of the first to learn about it in Mike’s presentation. You can register for free now by clicking here.
I’ll be back with you next week! In the meantime, check out our resources if you haven’t already. We have a wealth of great information online, including our trading manual, special reports, FAQ and more!
Best of Good Buys,
Jeff L. Yastine
Editor, Total Wealth Insider