(Please enjoy the latest investment insights from the Reitmeister Total Return portfolio).

Up and down.

Up and down.

Yeah…like a yo-yo. But unlike a yo-yo it’s hard to know which direction it will go next. So let that be the focus of our discussion today.

Market Commentary

Let’s set a baseline. My thesis and trading game plan about the Coronavirus was laid out as clearly as possible in the 3/2 RTR members only webinar. No need for me to recap or summarize. Best to just get it straight from the source by clicking the link below. Once you have those ideas firmly in place, then continue with the updated commentary further below.

Watch 3/2 RTR Webinar Replay Here

There is no real in change the story for the Coronavirus since Monday. In fact, I would say it is getting a notch worse as the # of cases and deaths in the US continues to grow (154 today up from 124 yesterday).

Yes, it’s a small number. And yet, how many conversations have you had about Coronavirus with friends, family, co-workers and EVEN strangers??? The answer is quite a few conversations. And that’s the point…it’s on everyone’s mind.

And some people are taking it a step further. Like canceling trips to limit their risk. Or start to stockpile food and water in their house. And yes, some people are even starting to walk around in public with face masks (especially in large urban centers).

This is happening while there are ONLY 154 cases in the US out of 331,000,000 citizens. Yes, its infinitesimal at this stage and yet it’s still the main topic of conversation. And starting to change habits.

So now imagine how ugly things get when we have 500 cases…1,000 cases…or God forbid, 80,000 cases like China!!!

Please note that I am a cool customer with this stuff. I have zero fear of contracting this stuff. But it’s not about me or you. It really only takes a small % of the population to flip their lid to change spending habits enough that harms the economy creating the next recession (with bear market in tow).

So don’t get caught up with the yo-yo action of the market. Just like the Monday rally was hollow leading to Tuesdays sell off. Likely that will be the same with Wednesday’s seemingly impressive rally.

All these rallies are subject to revision given what happens next with the Coronavirus.  

(read the above line one more time so it sinks in…and one more time for good measure).

Reity, how about the Fed cutting rates. Isn’t that a good thing?

Yes and No.

Let’s cover the No part first. Notice how after the initial 3% spike in stock prices they tumbled a full 5% from that peak into the finish line.

Why?

Because with rates already at historic lows, then why would the Fed need to do ANYTHING???

And the answer is that they are scared of what comes next. And after 10 minutes investors smelt the fear leading to the big sell off.

The good news is the same topic we have talked about numerous times in this commentary. That low bond rates makes stocks all the more attractive.

However, that is ONLY true if we don’t slide into a recession. Because…

Recession = lower earnings = lower dividend payments = lower stock prices

So yes, lower rates makes stocks all the more attractive AS LONG AS there is no recession allowing earnings and dividend payments to stay aloft making them more attractive than bonds.

That leaves us right where we started…it’s all about the Coronavirus and how it evolves from here.

If it gets under control, then we get back to 100% long with a focus on buying some of the most beat up groups that will rebound the most (energy, travel/leisure, restaurants, China growth stocks etc).

If the virus continues on a more destructive path, then the odds of recession go up and the value of stocks goes down.

Our portfolio is properly constructed for where we stand now and ready to roll more bullish or bearish as needed.

End of Free Preview

The rest of the commentary is reserved for subscribers to the Reitmeister Total Return portfolio.

Right now Steve Reitmeister is only 50% long the stock market given the concerns about the Coronavirus. Beyond a more conservative mix of stocks Steve also has 2 inverse ETF positions that are soaring as the market tanks. Plus 23% cash for good measure. This has helped customers weather the storm quite comfortably the last couple weeks. And he is prepared to get more bullish or bearish as needed.

If you want to see all 11 recommendations, plus future trades and commentary, then just start a 30 day trial. Click the link below to learn more.

30 Day Trial to the Reitmeister Total Return portfolio

SPY shares were trading at $301.91 per share on Thursday afternoon, down $10.95 (-3.50%). Year-to-date, SPY has declined -6.20%, versus a -6.20% rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...

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