The stock market fell again yesterday, proving to us that the Wednesday sell signal on the Nasdaq was real. In bear markets they are.
Yesterday big cap wonder stock AAPL got hit.
AAPL is the stock we were told everyone had to own and it still remains one of the most owned stocks by the most amount of people.
Now it’s falling too.
The reality is everything is falling in the markets now and there is nowhere to hide.
Even gold has been trending down.
But an important thing about gold is that it is not falling as much as stocks or bonds are.
Take a look at the year to date performances of the following:
SPY: -22.34%
QQQ: -35.15%
ARKK: -62.68%
TLT: – 33.59%
GLD -9.81%
TLT is the Treasury bond ETF. So yes, there are a lot of “safe” bond funds falling even more than the Nasdaq has been this year.
Meanwhile, the price of gold is down 9.81% so far this year.
Most stock investors are down well over 20% in their portfolio and would be happy if they could go back in time and move all of their money in gold this past New Years and be down less than 10%.
Gold is acting safer than the stock market.
It is trading less volatile than the stock market is, just like it did when the market crashed during March and April of 2020.
Typically, those things that perform the best during a bear market tend to lead on the next bull market cycle and actually turn up before everything else does.
That’s the position gold is in and the role it plays in an investment portfolio.
If you wonder why it isn’t going up just yet, you have to realize that there is a big deleveraging happening in the financial markets. Small traders aren’t taking money off the table – in fact the masses keep buying more – but big institutional money has been reducing its risk exposure and scaling back margin.
At some point I expect we’ll see gold breakaway from the stock market to the upside.
For now, though, the only way to really make money is by shorting stock market rallies, or buying for the short-term in what are really unique situations, with individual stocks that are somehow outperforming the S&P 500, as I wrote about the other day.
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-Mike
