Bear Markets Make For Easy Picks

I assume that readers look to articles like the ones I sometimes unenthusiastically compose to find gems, little-known stocks with big upsides which may not be on the average investors' radar. But the thing about bad markets is this: It makes choosing what to buy a lot easier. 

The S&P is not done falling, and so far, it is more "inflation" and less "stag" fears of dreaded stagflation hover over Wall Street like black immovable clouds. For sure, there are indeed reasons to worry, and anyone who thinks that equities will climb such a wall of worry with the rapidity we've seen in the recent past is wrong: Things are going to get worse.

So, now what? 

Well, if your small-caps are down big, it's worth taking a look at the company and deciding whether or not it's even worth it to hold and wait for a better day. Indeed, some of the stocks I own may not survive the next year or two. As for the bigger tech companies, the household names which have taken huge hits, for the most part, I'd say – hold and be patient. 

For those willing to buy, it is time to revisit the major indices like the S&P. Some boldly bearish experts like Morgan Stanley's Mike Wilson predict the benchmark just may fall to 3,460, contingent to some degree on whether or not estimated profit growth starts to turn negative as the fog of recession creeps in. Others, such as Strategas Research Partners' Chris Verrone, see the index falling to the 3,500-3,700 range. 

War in Ukraine and the continuing Covid-19 restrictions in China are proving just too much negativity for the market to see a rebound of any significance any time soon. I, too, remain pessimistic, but if one were to put lipstick on this pig of a market. If one were to squint hard enough to see a silver lining in this dark cloud of recession and inflation and geopolitical risk, that silver lining would be the opportunity to invest broadly in indices like the S&P should it fall to the aforementioned levels? 

Investors should not spend the time looking for diamonds in the rough. Not new ones, anyway. Look to your portfolio to determine which once-thought gems are worth discarding at a loss—and look to get back to the broad and boring task of ETF and indice-investing when it looks like something close to the bottom of this sinking market is in clear view.