The panic on Wall Street is rising to levels we don’t see very often.
But if you’ve been in the stock market long enough, it isn’t all that surprising.
Citigroup just became the third major U.S. investment firm to downgrade its outlook on stocks in the country. The firm lowered its rating to neutral from overweight – citing “a pause in U.S. exceptionalism” as the reason.
Citigroup isn’t alone… HSBC and BCA Research have also lowered their views on U.S. equities – due to tariffs, lack of support for NATO in Ukraine, and the Musk-led DOGE.
As the big firms sour on the U.S. stock market, other regions around the globe have been upgraded. Citigroup upgraded Chinese stocks and HSBC raised its rating on European stocks.
Regular readers know my thoughts on investing outside the U.S. In fact, I just wrote about it last week. There are so many great opportunities outside of the U.S. – but many investors will never consider them.
Sure, it takes time to find the best opportunities in other markets. But it’s worth it – especially when U.S. stocks pull back. That kind of diversification can help reduce the pullback in your own portfolio.
It’s never too late to diversify. But at this point, it may be more prudent to start looking for opportunities in U.S. stocks…
The CBOE Volatility Index (VIX) just hit its highest level since the random spike last August. Check it out…
As you can see, a VIX reading around 30 has often triggered at least a short-term bounce in stocks. This is where stocks can potentially begin to build a meaningful bottom, but I will be patient and watch the charts before deciding a bottom is forming.
I’m not ready to push all my chips (or cash in this case) into the stock market. But I’m much closer to starting the early stages of my bargain shopping strategy.
Before I leave you, I’d like to share a quick passage from today’s McCall Letter weekly update…
I started in this industry in 2000 – straight out of college in Pennsylvania. Since that time, there have been 41 instances of the S&P 500 suffering at least a 5% intra-year pullback. The most recent occurred in the last week. The index closed Monday down 8.5% below the all-time high set on February 19.
Not every pullback feels the same. But every single time we do experience a pullback, I start to wonder. In my early years, I would work overtime to try and find out the “why” behind the downturn.
As I matured in the industry, my focus shifted. I started to determine how big the pullback could become. Today, I understand that pullbacks are inevitable. On average, they happen nearly twice per year.
My current strategy is to try and remove the emotions from my trading. I try to focus on what’s causing the pullback… how deep it could become… and finally, when is the best time to start buying.
Which beaten up stocks are offering the best long-term opportunity?
I went on to break down the current pullback and laid out specific strategies going forward. If you’d like to get more information on The McCall Letter – as well as the list of stocks in our portfolio – I encourage you to click here.
I know it’s hard not to join in on the panic. But try to remember… Pullbacks happen.
This is where it really benefits to take the long-term approach to investing.
Here’s to the future,
Matt McCallEditor, Market Insights
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