For Max Gains in this Market, Focus on the Micro not the Macro

Want to generate maximum gains in this market? Then focus on the “Micro” not the “Macro.”

If you don’t know what I mean, consider this: Some investors are top-down-style people. They look at the market from a macroeconomic, big-picture perspective. They decide where interest rates, currencies, economic growth, valuations, and overall earnings are headed, then invest accordingly. Because of that, they use things like index funds and ETFs that cast a very wide net — and don’t really care about what the underlying companies are doing.

Other investors take a bottoms-up approach. They ignore all that stuff I just talked about and dig into the nuts and bolts of individual companies – the “micro” details. If the fundamentals and technicals of a particular stock look good, they’ll buy it – and just tune all the macro developments out.

There are definitely times when a macro-focused approach works. That’s especially true when a single, powerful economic force or sector is basically propping the entire market up. We saw that with tech stocks in the late 1990s and housing in the mid-2000s.

In fact, when my research told me the housing bubble was doomed to burst, I predicted that the entire real estate and financial industry would get decimated. I told people to sell every single stock with even a remote connection to the business because they were all going to get dragged down. And that’s basically what happened. The entire market went into a tailspin as part of the collateral damage.

But these days, we’re in a completely different market environment. There are all kinds of individual stocks and sectors that are absolutely trouncing the broad averages … and all for a variety of different reasons rather than a single, overpowering force.

Defense stocks are one example. Financials are another. Ditto for travel and leisure stocks, infrastructure and engineering plays, insurance companies, even (ironically enough) housing-sensitive stocks like those I’m now recommending in my High Yield Investing newsletter. It’s clearly no longer an “all or nothing,” macro-driven market.

That’s why I’ve spent so much time lately using the powerful screening technology and time-tested stock ratings system Weiss Ratings provides – and why I believe you should, too. You can find some incredible hidden gems that way, gems that are vastly outperforming.

That’s the thinking that guided the two new recommendations I just added to the High Yield Investing model portfolio last week. One stock should capitalize on the massive military build up here in the U.S. and in friendly foreign nations. The other is benefitting from the explosion in demand for physical and electronic records storage in this age of smartphones, selfies, and social media. It doesn’t hurt that the latter pays a yield almost triple the S&P 500’s!

My recommendations for you?

1. Sign up for High Yield Investing by clicking here or calling us at 877-934-7778. You’ll get the details on those two new picks, as well as all my other income-boosting portfolio plays.

2. Join me at the MoneyShow Orlando, which runs from February 8-11, 2018 at the Omni Orlando Resort at ChampionsGate. I’m going to share my favorite investments for 2018 there, and answer as many questions as you can fire at me. You can register to attend (for free) at the MoneyShow.

3. If you’re not ready or able to do either of those things, at least be sure you check the Weiss Ratings of every single stock you hold at our website. If you’re stuck with a bunch of names rated “D+” (SELL) or lower, consider switching into those that get better grades from our Ratings system. That should give you added confidence in the fundamental strength of your portfolio holdings.

4. Stop hiding in index funds! That approach worked for several years when we had an all-or-nothing, everything-is-up-or-everything-is-down kind of market. But times have changed. If you want to maximize your gains, start thinking micro over macro!

Until next time,

Mike