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What a week it's been for the markets, right?
The S&P 500 has attempted to break out to a new high, even as other indices and sectors have lagged. Treasuries and the U.S. dollar have given back some of their recent gains, but still remain well-supported.
We're also seeing volatility gauges like the VIX stay firmly parked in their new, higher ranges despite the surge in stocks. And we're getting mixed news on the tariff and trade front. President Trump announced a deal with Mexico, but potential negotiations with Canada and China look to drag out for much longer.
So, what do I recommend you do now? The same thing I've been recommending you do since February: Stick with a "Safe Money" approach to investing. None of the challenges I've been outlining have gone away, nor have any of the main profit opportunities changed.
This remains a great time to focus on higher-yielding, higher-rated, promising winners in more defensive sectors. Case in point: One stock I just added in my Weiss Ratings' Safe Money Report in the beaten-down, cheap as ... well ... dirt fertilizer sector just exploded out of a long-term trading range. It's now trading at its highest level in almost three years, but I still think there's time to get on board. You can read more by subscribing here.
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Now I wanted to offer something special to you as a Daily Briefing reader. I know that you may not have had the chance to get out to the MoneyShow San Francisco, and you might not be able to catch my next appearances in Toronto and Dallas. (Though it'd be great if you can; the link to register for the Toronto show for free here and the Dallas show link is here.)
So, I wanted to share one of my two PowerPoint presentations with you. You can access it online here. I delivered this in the "Bull Pen" in the San Francisco exhibit hall last Friday.
The basic idea? Despite the bounce in stocks, several major background concerns and threats have been building up over time. That includes renewed bubble-icious activity in everything from tech stocks to residential and commercial real estate to leveraged buyouts to corporate debt.
Throw in excessive asset valuations — with some gauges showing stocks more overvalued now than at ANY point in history, including the Dot-com Bubble peak — and you end up with a market that's facing greater risks now than at any point in the nine-plus-year bull market run.
As I told the crowd, that doesn't mean we're going to wake up on Monday morning and the Dow is going to be on the verge of plunging 5,000 points. But it does warrant maintaining higher levels of cash, pivoting to investments with a greater margin of safety built in and taking other protective steps.
I hope you enjoy the presentation.
Until next time,
Mike Larson
