It's A Dangerous, Dangerous Market | New Harbor

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**Mike Preston** (0:54)
It's a dangerous, dangerous market. We're watching it closely. We have a relatively underweighted exposure here still.

**Adam Taggart** (1:06)
Welcome to Thoughtful Money. I'm Thoughtful Money founder and host, Adam Taggart. Welcoming you here for another monthly recap with the lead partners at New Harbor Financial. As regular viewers of this channel know, they're on with me every week on this channel, usually reacting to one of the key interviews we've done. But every month, we like just to do a drill down, just exclusive with these two partners to find out what they are looking at in terms of all the data and how they are translating that into how they manage their client capital. I'm joined as usual by John Lodra and Mike Preston. Gentlemen, great to see you. Mike, why don't we start with you? So obviously, the big news of the week is the action that happened in the Middle East over the weekend, most notably the US taking an active role and bombing Iran's nuclear facilities. And the big surprise there was not just that we did it, but that during the weekend, everybody expected the markets to plunge when trading opened and for oil to spike. And in fact, we've seen quite the opposite. Markets have run basically back to all time highs or super close to it. And oil is down in the mid 60s now, having been up in the mid 70s right before the attack. So, love to hear what you guys think about this. And I'm wondering, is this maybe a good time to enter the oil trade if you've got a longer term perspective?

**Mike Preston** (2:31)
Yeah, Adam, it was really surprising over the weekend. I know a lot of people are worried about the headlines, at least in terms of how it might affect markets and their personal investments. But the market is all psychological and often acts immediately contrary to what you might want to do with your gut. And that's why the market is so treacherous, particularly for short-term trading. If you're not used to doing it, if you don't know how to use hedges, if you don't have loss control in place, you're going to get burned. Just taking a look at some of the numbers here. Since that, I guess the bombing of the nuclear facilities was on Saturday, I believe, on June 22, and on Monday, the stock market's rallied. On Tuesday, the stock market's rallied. In fact, the S&P is up 2.27 percent, and it's only Wednesday as we're filming this. So the third day after the bombing, we're up almost 2 and 1 third percent, and the week's not over. On stocks, we would have thought that stocks would tank. And the stocks are sitting here, knocking on all-time highs, defying all odds, and we have seen a buy-the-news reaction. That's not the first time we've seen things like that. Other times, and I don't have the charts prepared to show you here, but other times when the missiles start flying, oftentimes that's when traders buy. I remember back in the days that John and I worked at Payne-Weber, which later became UBS, Art Cashen, who is a great commentator since Saturday has passed away, said something like, once the missiles start flying, start buying because either it's going to be a good opportunity or the trades won't clear. Meaning if it's a real deal, a real bad situation, the trades won't clear and therefore, you don't have much to lose. But that's how traders think. And we're not saying go ahead and just put a lot of risk on, but that's what happened contrary to what we might think. Gold, down 2.3%, a pretty muted reaction.
Really not much to think about there, worry about with gold. Gold has a really fantastic chart pattern. I know you were just talking before this video with Steph Pomboy, and Steph Pomboy was talking about how she envisions a move more and more into hard assets, and she's super bullish gold. We're bullish gold here in the 33, 3400 range, and we think that this slight pullback is an opportunity for people that are looking to add exposure. And the big number I'm looking at here, the chart, oil. Oil was off 12% in two days. One of the biggest plunges in oil that I've seen in a short period of time, in a long time. And you asked, is this a good opportunity to get into oil stocks? We've had similar conversations several times in the last few days with clients about this. The problem is this, oil and energy stocks have been in a downtrend for close to two years. Our style here at New Harbor is to buy relative strength leaders and to buy breakouts. So we are long-term bullish on this energy complex, but we're not going to buy it until we see some real leadership. And you really don't want to jump into this group right now as a gut reaction, because as I said in the beginning of this chat, it's usually the wrong thing. So jumping into oil stocks here is not right, I don't think. Wait for some basing and a breakout. As far as the S&P and the broad stock market, we'll talk about that a little bit more, a little bit later.