BUFFETT SELLS STOCKS, MONEY FLOWS INTO BITCOIN ON BAD NEWS

By Nigam Arora & Dr. Natasha Arora

To gain an edge, this is what you need to know today.

Buffett Sells Stocks

Please click here for a chart of Buffett’s company Berkshire Hathaway ().

Note the following:

  • The Morning Capsule is about the big picture and not about individual stocks.   is being used to illustrate the point.
  • Warren Buffett has been the most successful investor of our time.  Investors should pay attention to what he is doing with his money and not to what he is saying.
  • The chart compares BRK-B with S&P 500 ETF ().
  • The chart shows that BRK-B has lately done well when measured against S&P 500.
  • Buffett is known for buying stocks and holding them for a very long time with few exceptions.
  • BRK-B has a large portfolio of stocks including Apple ().
  • BRK-B is sitting on cash of over $140 billion looking to invest.
  • BRK-B is a public company.  Buffett has been under tremendous pressure from shareholders to invest the cash.
  • Did Buffett invest the cash?  Instead of investing in other companies, Buffett was a net seller of $1.2 billion of other stocks.
  • Buffett also slowed the buyback of BRK-B stock to $6 billion.  The expectations were for a much higher buyback.

Bitcoin

It is likely that the U. S. Congress will tax crypto transactions.  This is very bad news.  What does bitcoin do on this very bad news?  It is running up.

Investors need to understand that bitcoin trading is controlled by a small group of whales.   Bitcoin does what the whales decide to do.  Herein lies the big risk for bitcoin investors.

Unlike stocks and futures, trading in bitcoin is very opaque.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial)  stocks in the early trade.  Smart money is 🔒.

Gold

There is selling in gold on concerns that the Fed is boxed and may be forced to pursue more sensible policies.  If the Fed makes a shift to more sensible policies, there will be less need for investments in gold.

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

Oil prices are plunging on the outbreak of the virus in China. 

The momo crowd 🔒 oil in the early trade.  Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down and bonds are ticking up.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1742, silver futures are at $23.86, and oil futures are $66.32.

S&P 500 futures resistance levels are 4460  and 4600: support levels are 4400, 4318, and 4200.

DJIA futures are down 59 points.

Protection Bands and What To Do Now?

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding 🔒 in cash or treasury bills or short-term bond funds or allocated to short-term tactical trades, and short to medium-term hedges of 🔒, and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

To take a free 30-day trial to paid services to gain access to more opportunities, please click here.

This post was just published on ZYX Buy Change Alert.

 

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Nigam Arora

Nigam Arora

Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.

Dr. Natasha Arora

Dr. Natasha Arora

Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.

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