Adam Johnson (BullseyeBrief.com, Market Correction)

00:10:38

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

The financial exchange with Barry and chuck is alive on FaceBook and YouTube every morning beginning at ten and this is the financial exchange radio network. This segment of the financial changes brought to you buys you rent if your landlord. Take advantage of zero and a fully automatic on line rent collection tool. That is free for landlords with an accountant participating bank and always free for tenants now collection of local banks offering this unique program including. Leader bank and stone bank sign up would have rent payments directly deposited into your count. Call 781641. 8691. Today visits he ran dot net for more information member FDIC. Adam Johnson from bull's eye briefed dot com joins us on the line now and Adam thanks for taking the time. Appear very. And little green on the street bank that the field commitment. It doesn't mean it's you look this the first time we get rid the first thousand point drop in Dow history on Monday we had the second one yesterday so it's it's it's been a week we can certainly say that. My question to you you know this is typically the time to market were a lot of retail investors tend to bail do we have any data on whether or not that's happening here. We do it makes me so bad that the so many retail investors getting out in what I think is going to prove it very temporary setback for the market littler associates. Track all the different flows but don't retail funds I mean all of them doesn't hundred. And with a total for the week during that 23 point nine billion dollars billion with a B has exited. He's retail funds over the past week. And it it just it built an intensity that people who work. No hard doing what they do every day. Saving money you know trying to rate badly that they'll saving money they put it to work in the market. And the market rate eight or 10% they get scared happy all the money. And you know once you called a money very hard to get back. Adam my question to you eat you know a lot of our listeners are homeowners and obviously went home prices go down they don't go and and run to the exit and say OK we got to sell this place. Why do investors look at stocks differently F I've tried to figure this out why do they think that it's good to sell the bottom in a stock market correction. Not that they think it could open bottom. Is that unfortunately not like it they're in their space because guys like Hewitt Mir docking. To turn large right nothing run without that. I hate to admit it but you know I found myself at that bastard you know what and an investor now for twenty like yours so. I just found over time that when I don't look at the screens I do better. I can just focus on quality businesses and metrics that matter. Cash flow. Cash flow yield earnings growth. I outline fail. Were reading the transcript of a company's earnings are important in what the CEO Ed and at how to beat analyst. I'll put questions to this via well. How this yet over you know that you actually burned about that that is an eighteen get comfortable. Owning a business through them I'm very difficult moments like that one. So and a tube very good point the Dow currently 24018. As were speaking. February 9 of 2017 it was 2000180. For February 9 of 2016 was 161027. Points we've been through this incredible run up. Why. Do you think it's so hard for people to lose track of where things are now compared to a year ago or two years ago. And you know instead panic about what's happened in the last five every day's. That is about psychology. And arrogant and it'll achieve Italy which they would rather not do but yeah I think you know you bet the question and you know I. I think you just really have to be able bet back you know who yard person and figure out what your go away and you know what you see now moving around Wayne newspapers are throwing headlines. Maybe your fate is very key to get caught up and you know we live and let. There's 24/7 world never shut down there's always an opinion on Twitter there's always somebody doing something. And I think as a result we we kind of getting caught up in the coal. You know sort of maelstrom it's like water but it. I mean there. All in you know sometimes about what to do just that it. Adam let's talk about what's going on underneath all of this because obviously you know this this. This correction started. Last Friday but it started on the back of good news not bad news correct. Oh yeah I mean what's happening in the economy is a wonderful. People are working they're big money. As a result companies are profitable and they're growing earnings by the way that your fifty to 20%. So as a result interest rate. Are rising and I have been in Portland. We're gonna get 3% on the ten year we're now very close reading your workers I GDP people I don't treat you now that it has by two. Good news. Rate should be Billy rates are going up inflation is going up slightly because we have growth in the economy the economy is no Roebuck. It is a sign that celebrate wrote to inquiry growth in these long. It is not a sign the run away in fear higher rate higher rates are good they it says were growing that right direction. And how much this you know looking at those higher rates how much of this is simply a response to the fact that this is being in a stock market that is largely been supported by central banks over the last decade. And it appears that you were kind of making a transition away from that support and towards the economy being able to grow on its own. And it's an adjustment for for investors to be able to price things accurately. Yet you just add keywords added adjustment we are going through a period of adjustment. And they're really two adjustments here what is as you point out. And what by the way handoff from Central Bank. Do there real economy you know central and by the way the other is the period adjustment a higher rate. But we get to that first issue and operatives that the bank but the real economy. I've been critical at at a number at a special. Be perfectly honest especially a picture out of Dallas and now his replacement Caplan who is running these Federal Reserve Bank in bell. Boat at that sit beside their own institution. Stuck around to law. The red came in back in 2009 and created eight in the bond market when bill would deal would buy. But he too many late they did the court where they arguably made the bond market and about market a much bigger than the stock market. It's more meaningful even though you know we don't really great bond between retreat doc talk about on. But on they may have in 2009 created is would know what else would you bet. And that may effectively lighted the bank has been with capital. When the banking and totally locked up they'll get big they needed to do that. Now Kaplan picture and forgive me agreement that that's been category and I would say and I would argue that odd. That they'd work would probably done six or seven years ago but they stuck around because you know they they want grew up. And the other at a bank around the world are we borrow it but look at what is happening on the last week we are about yours European Central Bank Mario Draghi. On is is going to. Scale back he'd been threatening to court with scale back the bond buying for months now it actually doing it. We heard from mark REP. Men who runs the Bank of England. That he too is going to start increasing rate you worry being that in Canada. You know central banks around the world are taking cues from the bad thing OK guys. You're right we got through and now there's a period of adjustment that can if you will. And were all right is wrap our heads around it but at the end the data broker it were getting back normal the economy is robust. Not our people are spending money docs are making money as a result and again this is the time to embrace equities not runaway. And we've got just about a minute left here. What looks cheap free over the rest the year what would what looks attractive. I love the fact that Google traded down when he every city Google looks at it. Than the other it that means they look at a bill went through some struggles right now finding their. News feed but are going to be spied I love or down here. Is a bit and I mean it's yielding over 6%. They're the band guard at electric vehicle I think media is gonna buy Viacom wanna buy C eight. Beat the previous board is actually discussing it. I liked the dub on spot he get short which is temperature hit me. By box and ideologues spot news our ports and fox station that's way too cheap like five or six dollars to break. Mean there are a lot to buy right now energy on staying away from even though oil former oral trader at love it. Just because I think oil is up to arch its you know violated US is now producing more oil in Saudi Arabia did incredible. Now it's unbelievable there Adam thank you for the time today we appreciate it. It's it's perfect fours we can just sit back and it kind of enjoy it's nice brick almost. And you do that is Adam Johnson from bull's eye brief dot com I like his list of wicked bargains there at the whole bunch of them. On Truman and and here's the thing is again if you or someone in take a look I pulled up there was the the flows going into and out of funds. From Lipper okay. The week before so last week. Equity inflows were sixteen billion dollars there were people saying hey I like this market Donna put sixteen billion dollars in these individual investors. This week. All of a sudden what you late last week at a higher price you no longer like. What changed for you and it's not saying that is market might not go down more but if you were a buyer when the Dow was at 26000. Why did you decide to sell a 24000. And and there's no reason other than psychology because fear overwhelmed. Agreed that you had previously that's all that it is.
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