How to Make "Cents" of this Market

The last few weeks demonstrate a truth about the stock market that I try to always keep in mind.

And if I forget, then "Mr. Market" is sure serve up a reminder.

We may think we have things figured out. And we may believe the market should do-this, or do-that. But the market doesn't care what we think and goes its own way.

So it might sound crazy that the Nasdaq is only 5% from its all-time highs in 2021. But that's exactly the situation:

Faced with this dichotomy, we can "dig in" and find all kinds of reasons why the market is wrong and we're right. Or we can choose to accept the stock market's version of "truth" and move on.

The fact is that, through years of investing and trading, you're going to be wrong - about a particular stock, about the market in general, or both at the same time. You're going to be wrong, in fact, a lot.

Look at even the best of investors, like Warren Buffett, and analyze their portfolios for decades at a clip. You'll find a bell curve of many losers, even more numerous "so-so" stock picks, and a relative handful of splendid stock ideas that carry the portfolio to stock market glory.

The one thing we don't want to do...in any situation bullish or bearish - is stubbornly and habitually watch small losses turn into big losses. If we do that, our portfolios and self-confidence will inevitably run into disaster.

Making "Cents"

So let's suppose you're like me - and the market advance of the past 3 weeks now has you feeling like the train left the station without you.

But here's the thing - you don't have to chase and buy high-fliers like Nvidia, Microsoft to put yourself in a position to make money.

The key is remembering that a typical market rally inevitably "broadens out" in order to keep going. So the trick is looking for stocks that have good fundamentals or expectations of rapid improvement, but - from a chart-perspective - have been largely left behind by the market's initial advance.

Travel stocks are one of those areas I'm looking at these days. For example, recent headlines predict the coming Thanksgiving holiday period should see record-setting amounts of airline travel.

Yet travel stocks in general, are roughly 25% lower now than a year ago. And many airline stocks are as much 40-50% lower over the same period.

Yet fuel costs are low. And as indebted as many Americans are - we always seem to have a few dollars (or an extra credit card) to pay for holiday travel.

For example, the folks at AAA expect that this year's Thanksgiving travel period may turn out to be the busiest since 2005, with 7% more people booking flights compared to last year. Most carriers expect to see similar record-setting results. And if we extrapolate a bit that if Thanksgiving is going to be a big travel period, then Christmas may well be, too.

My overall point is that travel stocks have barely begun to discount this possibility.

All that could add up to a nice rebound rally for many stocks in the travel industry, presuming the broader market rally continues to plow its way higher.

Best of goodBUYs,

Jeff Yastine