Top Newsletter Still Betting on Stocks

Back in the spring of 2009, while many were still mourning the “death” of stocks, Gray Emerson Cardiff’s Sound Advice newsletter said that we were on the cusp of a “SuperCycle” for stocks, in which stocks would outperform real estate. Now, after the market’s recent rough stretch, the newsletter isn’t wavering.

“This is a correction early in an extended market rise,” the newsletter recently opined, according to MarketWatch’s Peter Brimelow. “We’re not preaching bravado in the face of chaos. We believe it’s a time for judicious buying, not selling.”

Sound Advice, which over the past decade has averaged annual returns of 10.24% vs. 0.22% for the total return Wilshire 5000, uses a system that looks at various leading and lagging indicators to determine when to sell. And right now, Brimelow writes, those indicators are “not even close to triggering a sell signal”.

The newsletter offers some insights into its long-term, value-centric approach.

“Value investing … demands you look beyond current market passions in order to avoid what is overpriced and to grab what is cheap — even when there is no visible catalyst to create a lightning reversal of fortune,” it states. “In the middle of a market downturn, value investors ought to be busy considering what Mr. Market is putting on sale rather than fixating on why we own stocks in the first place.”

Sound Advice also says it is positioning itself “in anticipation of a substantial, if not consistent, recovery in the U.S. and globally”, and likes natural resource-related investments. It says for now it is viewing the downturn not as the start of a bear market “but simply a period of adjustment”.

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