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Payne's Perspective:May 26, 2020: Time for Knockouts

By Charles Payne CEO & Principal Analyst

Anthony Joshua is one of the two world heavyweight boxing champs, but his luster has stemmed just a bit in the past year. 

On October 5, 2013, Joshua hit the boxing scene like a tornado, facing an opponent sporting a record of eight wins, zero losses, and three wins by knockout. Joshua knocked him out in the first round.

Joshua continued his dominance, winning the successive fight with spectacular knockouts. He is well-spoken and handsome (my wife calls him Adonis). He was on the road to mega-stardom -that trajectory got a super boost when he climbed off the canvas against legendary heavyweight champ Wladimir Klitschko to win by knockout.

As a fan, I noticed something was missing in his next couple of fights. He was dodging punches from smaller men and not imposing his size and strength. Then came his bout with Andy Ruiz Jr., which ended with Joshua leaning on the ropes, completely out of gas.  It was a technical knockout for Ruiz Jr., who climbed off the canvas to pull off a Rocky type upset win.

They fought the rematch last December and Joshua won with ease, as the overweight Ruiz Jr. could not lay a glove on him. However, this was a different Joshua. He came in much lighter, still muscular, and certainly no Adonis. He slimmed down to have more energy, as his game plan was to stick and move like a fighter in a much lower weight class. 

He won, but it was not the same. I get these dudes do not want to get their heads scrambled, but boxing fans loved the knockout, and that means you must get close to your opponent. Joshua was practicing social distancing in the ring three months before everyone had to learn the practice in their own lives.

Joshua is a class act, win, or lose, so I will continue to root for him. But I’d love to see him get back to knocking people out.     

Now, I am Sticking & Moving

Question: Has this year felt more volatile than ever? If you answered yes; well, it has been. Look at the percentage of sessions where the market has moved 3% or more. This is nuts; of course, it’s those down days that often start as snowballs, but shift into boulders in the blink of an eye. During the market’s stellar round with the March lows, I have had to adjust. Because of the volatility noted above, I have been taking profits on positions much sooner than I usually would. I am not taking small gains, however. Most of the time, it’s a double-digit profit in a very short time. These are stocks bought in the model portfolio ostensibly to be held for three to six months or longer.

Regrets, I've had a few

Now, do not get me wrong. I cringe when I see a name I love is higher, but we took a quick profit out of an abundance of caution. Here is the deal: investing is the art of managing risk and reward. What I am most proud of is the fact I’ve been able to go into the stock market, as all the mavens sing from the same ‘doom and gloom’ hymn sheet and find ideas during those massive dips. That is the other part of successful investing: buying low. It’s easier when you know the fundamentals and realize the crowd has piled on too much and overreacted.

But then again, too few to mention

Moreover, there are times when we close out positions and see them slip into free-fall mode shortly thereafter. Considering the stock market normally takes the staircase up and the elevator down, just one of those disasters can wipe out numerous gains. Believe me, there have been enough times, especially in March when I was thrilled with all the positions I had gotten out of too early.

So, I have taken a page out of Joshua Anthony’s book and I have been sticking and moving - dancing around like a welterweight with little power, but with great athleticism.

Allocation & Stock-Picking

Yes, it is an old cliché, but this is a stock picker’s market. As such, you cannot hang out in broken funds and stocks with broken underlying business models. Moreover, this is not the time to want to match the performance of the market just to save on fees because it’s missing grand-slam opportunities while staying in ‘long’ deeply flawed positions.

Here is the issue, too many stocks are still deeply buried.

S&P 500 performance as of May 21st:

114 winners

  • +13.1% average gain
  • 38.29% average gain of the top twenty winners
  • 7.86% average gain for the remaining 94 winners

391 losers

  • 24.9% average loss

This is a classic investor dilemma, and its haunting professional investors more than individuals. 

To read the full report, contact your account representative or email info@wstreet.com 

Charles Payne
Wall Street Strategies


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