What I'm Investing in Now.
This has been a tough year for investing, but opportunities are abundant. I'll even give you 3 of my favorite holdings.
Thank you all for reading The Tobin Report. I’m going to open by asking for a favor. I think we all need a little help navigating these difficult financial times we are facing. By sharing this report and asking a friend to subscribe, you’re spreading the word in helping raise financial awareness so we can all get a little better with our money. Thanks again.
Eric
Let’s face it, 2022 has been a rough year for investing. It doesn’t matter who you are. Even the guy who writes The Tobin Report (that’s me) has had a very challenging year. I would be lying if I told you I didn’t have red on my screen for many investments. 📈
However, I have a lot of green too. So for this week’s Tobin Report, I decided to interview myself. I’m hoping it proves valuable so you can see the realities of where we are in this market and what you can do to profit in the coming times.
🎤Allow Myself..to Introduce…Myself…
The Tobin Report (TTR) interviewer (it’s really me in disguise like Austin Powers):
1️⃣ Obviously we are in a bear market, Eric. How have you been making money in this environment?
Me: (not disguised as Austin Powers):
🥃 Honestly, it’s been difficult. I wrote an article a couple months ago on my favorite methods for income, selling cash covered puts. Even THAT has been tough in this market. If you missed that article, read it here ➡️ My Favorite Strategy For Monthly Income. It’s still a valid strategy and making me money, but not as much as when market conditions were more favorable. Also, my long term portfolio of commodities has been getting hit with everything else. It’s short term noise, however, while the Fed continues to raise interest rates. ALL markets have been in a “risk off” mode where everything is getting sold.
Everything.
Sure, markets get a bounce every so often, but the trend is down. Cash can be your friend and a great tool to deploy as we move through this market.
It’s in these markets that emotions need to be kept in check. It’s hard to do but when you think the sky is falling, you should be looking to buy. I don’t mean just buy because something is down. Buy QUALITY while it is down.
Buy what will do well when looking out 6 months or a year from now.
Most people sell because they are scared. Do the opposite of what your emotions tell you to do. Zoom out. Think long term.
I still believe what has worked for the last decade is NOT what will work in the next decade. This is extremely important. Understand, however, that this is my opinion.
The Tobin Report:
2️⃣ You recently mentioned in an interview on CNBC that you were still expecting markets to go down. Is this true? How far can we go?
Me:
🥃 To be fair, I was never on CNBC. I said that to sound cool. But you are correct, I have been calling for markets to go lower. I posted a chart back on August 3rd in my article, New Trade Idea, indicating my expectations of the market. See the chart below. Compare that to what actually happened since August 3rd. You can see the chart was telling me markets were going lower…and they did. In that report I shared how I plan on profiting from the downside by using the inverse ETF QID and SPXS. I’m up over 30% since I made that recommendation. This has been a hedge in my portfolio as everything else is in the RED. I’ll take the win here, however.
My two cents: Until the rate hiking narrative changes…and on any big up days in the S&P 500, I will continue to use SPXS to protect the downside.
The Tobin Report:
3️⃣ That’s great, Eric, but you didn’t answer my question. Where do you see markets going from here?
Me:
🥃 Down. Not necessarily in a straight line…but down. I believe we will continue to see weak data in the economy (jobs, earnings, and housing, specifically). However, at some point, Jerome Powell will slow the aggressive rate hikes. We just don’t know when…and at what cost. My guess is that the bond market will be the first to break. I’m looking for capitulation. HUGE fear in the market…a sustained bloodbath for 3-5 days. THIS tells me we might be close to a reversal.
The Tobin Report:
4️⃣ Will uranium, gold, and silver stocks also go down if the broad markets go down?
Me:
🥃 Most likely. At some point, however, I expect them to de-couple from the broad market. I don’t want to be sitting on the sidelines when this happens because those are the biggest and best moves. We’ve already seen this starting to happen on certain days. I can see it in the volume, which is another indicator I use to guide me. BIG volume days are institutions piling in. When the world realizes how fraudulent our system is, gold will outperform. Until then, most stocks will get sold.
The Tobin Report:
5️⃣ What do you mean by “de-couple”?
Me:
🥃 This means as money floods out of the Nasdaq, for example, that money flows into energy like uranium and safe currency like gold. Make no mistake, however, uranium is in a volatile sector and has been mirroring the general stock market in this risk off environment. You’ll see de-coupling when the Nasdaq is down 2%, for example, and uranium equities are up 9%. This is an example of what I’m talking about. In fact, at the time of this writing, the Nasdaq is down almost 4%!! Gold is up slightly. Uranium (by way of Cameco, CCJ) is only down 1.5%. Today, gold and uranium are OUTPERFORMING the broad markets. A true decoupling will be obvious, however.
The Tobin Report:
6️⃣ Any other information you’d like to share with your readers before you go back to the gym to squat 500 lbs? 🏋️♂️
Me:
🥃 Well, I’m no Gary Tomatani, but yes, I do.
These are extremely difficult times to be invested. I’ve also never been more excited to be an investor. We have some scary times ahead but with that we have some great opportunities. This is when money is made. Finding those opportunities is the challenge which is where I spend much of my time. My conviction is high with what I am invested in, but timing is always difficult. What do I mean?
Buy right and sit tight.
Gold, for example. I have been investing in gold mining companies since the Covid crash in 2020. I sold out of all of it in the spring of 2021 with great profits but got back in 6 months later. I was too early. I may even STILL be too early.
However, I’d rather be a year early than a day late.
Gold does well in very specific environments. Gold does horrible in most other environments, specifically a rising interest rate environment…which is what we are in now.
So then why am I still invested in gold??
Because gold leads on the way out of the broad market downturn. I can neither predict nor time the exact bottom but I want to be invested when it turns…because when it does, it’ll move fast. Historically, gold makes its move roughly 4-6 months ahead of a Fed pivot when it smells out a reverse in policy. Why? Well, a slowing or reversing of interest rate hikes, especially in an inflationary environment, is further inflationary.
THAT IS WHAT GOLD LIKES.
This is what I am waiting for. Could gold go lower? Yes. Am I nibbling at gold mining companies? Yes. Time is my friend. I’ll sit, wait, and have a seat at the table when it rips.
The Tobin Report:
7️⃣ Okay, well that concludes this awkward interview. Thank you for your time, Eric.
Thanks again for reading. Check below for three of my top holdings that I think will be a double or triple in the next leg up.
Eric
BONUS MATERIAL
To show you my appreciation for making it this far (or for just skipping to the bottom. Whatever works for you, lol), here is some bonus material:
Here is a list of my top precious metals and energy investments. This is not investment advice, but merely a peak at my biggest holdings. These are producers and royalty companies. These are the safer plays in this volatile space. My expectation is that these will be the leaders once the overall correction subsides.
Uranium:
Cameco (CCJ) - market cap $10.5 bln, largest uranium producer
Gold:
Sandstorm Gold (SAND) - market cap $1.4 bln, gold royalty company
Silver:
First Majestic (AG) - market cap $1.9 bln, silver producer - Mexico
Love how you insert humor in what is definitely a continuation of uncertain times where our "hard-earned" money can be gone in a flash. Many of the textbook "rules" of investing, i.e. when X is down then convert to Y, have been debunked or tossed out in this new age. Keeping an ear to the ground, as you do, and sharing your insights is much appreciated.