3 Stocks To Sell Now
The recent stock market sell-off has everyone awaiting the big plunge. After striking new highs, the Dow Jones Industrial Average fell off a cliff earlier this week. Waves of fear gripped the market as pundits debated the reasons for the aggressive selling. Everything from the Supreme Court nominee and Trump to rising interest rates and seasonality have been named as culprits.
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The Dow dropped nearly 1,400 points over the last two days. However, today, Oct. 12, stocks rebounded sharply. The Dow rose 364.52 points, or 1.46 percent, the S&P 500 rose 1.45 percent, and Nasdaq, which was the hardest hit on Wednesday, gained 2.22 percent.
The truth is, the selling is far from extreme. In fact, it isn’t even unusual this year. Taking a look at the daily DJIA chart, similar trading has occurred multiple times in just the second half of this year. Each several days selling bout was quickly bought with new highs following soon after.
#-ad_banner-#No doubt about it, the bull market is looking strong with every sell-off being snapped up by the massive index fund’s buy programs.
Make no mistake, the bears will eventually get what they crave. However, I remain convinced it will not be until 2019 at the earliest.
While there is little doubt that the overall stock market remains healthy, there are a few stocks that are screaming sells right now.
In fact, these screaming sells can make great shorts for experienced investors who understand this money-minting tactic.
Here are three stocks to sell immediately:
1. Tesla (Nasdaq: TSLA)
It pains me to be bearish on Tesla since I love the company so much. I love the cars, Elon’s vision, and everything that Tesla represents. However, being an investor forces one to see things objectively and make decisions counter to feelings and opinions.
As a company, Tesla is one heck of a mess. Its problems include killer debt, internal struggles, a leader who sometimes follows his personal goals without thinking of the shareholders, and cutting-edge products that are mostly untested over the long term, despite being wildly popular.
In an effort not to bore you with the numbers, there are three specific reasons Tesla will never see new highs for many years, if at all. 1) The cash burn rate is off the charts. 2) The production goals are pure fantasy. 3) The technical price picture is abysmal.
The share price is down sharply on the year and below all technical support. Bad news will have a far more substantial effect than good news at this point. Do not be surprised when the waves of negativity ramp higher shortly.
I expect Tesla to give back another 25 to 50% over the next 52 weeks. Savvy investors may want to try to short the shares right now but be prepared for dead cat-type price bounces on the way down.
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2. Wells Fargo (NYSE: WFC)
I never liked this company. I remember back pre-crisis when Wells Fargo was pushing 120% loan-to-value automobile refinancing. It struck me as a very irresponsible path at the time, and that mindset appears to have continued.
Recent scandalous fiscal behavior at the bank has led to aggressive attempts at rebranding and restructuring. However, the sanctions on growth have stymied hope of a restructuring rebound anytime soon. Not to mention the extreme difficulty in winning back the public’s trust when there are multiple choices in the marketplace.
It took many years to build WFC’s reputation in the marketplace. A social media and traditional marketing campaign cannot even begin to reignite the public’s trust.
Due to these likely insurmountable obstacles, shares are trading lower by nearly 12% in 2018. I expect another 50% plus decline within the next several years.
3. Sears Holdings (Nasdaq: SHLD)
This old line retailer is breathing its last breaths. Once a stalwart of American consumerism, years of slacking has ruined the brand.
Shares are trading lower by over 80% this year, and the company just announced it is preparing for bankruptcy.
The company was trading at over $100.00 per share just a decade ago but has plunged into the $0.40 zone recently. A massive loss of wealth for what was once the world’s leading retailer.
Add in seven straight years of losses and zero sales growth since 2008, and it signals the death knell for Sears.
I expect another 50% decline into the $0.20 per share zone before seeing any possible bounce.
If you are holding Sears and hoping for a bounce higher, be very cautious!
Buying stocks in bankruptcy can be a viable strategy for sophisticated investors, but wait for the filing to pick up the shares much lower.
Risks To Consider: Anything can and does happen in the stock market. The only constant is change so be ready for the unexpected!
Action To Take: Consider selling the above dogs. Sophisticated investors may wish to take short positions.