January 11, 2021

What to Buy Today? (Bitcoin, FAANG Stocks, Gold, or Banks)

Midas Letter
Midas Letter
What to Buy Today? (Bitcoin, FAANG Stocks, Gold, or Banks)

This is the first full week of 2021 that all hedge fund and institutional traders will be back on their desks after the holiday period. With lots of uncertainty surrounding the markets regarding stimuli, possible lockdowns, overbought momentum indicators, and sell-offs in the largest stocks… What are those large traders looking at buying today and how should you position yourselves in the stock market?

There is lots of news flow on the horizon: The start of earnings seasons (financials and banks up first), and big data like employment and retail on deck for this week. So, will markets have the catalyst it needs for a large correction in the next few weeks like bitcoin experienced today? We encourage all traders to analyze risk/reward and the probability of when an inevitable pullback will happen.

So, how do you hedge your portfolio? Glad you asked.

  1. Add defensive assets to your portfolio like a long-term bond. Every time the large indices head back towards their 200-day moving averages we see rallies in bonds like NYSEARCA: TMF.
  2. Add a non-correlated asset to your portfolio such as gold. When stock prices drop, gold has tended to spike.
  3. Diversification through ETF’s. Eliminate systematic risk in markets by lowering exposure in individual stocks.

On top of hedging, if you want to know the specific sectors and stocks we are looking at moving forward, watch the full interview.

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

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