Why You Can't Just Blindly 'Buy and Hold'

Everyone is a "long-term investor"... until a stock heads south. Then things get tricky. Does that mean you should buy more shares at the lower price? Sell the whole position? Or just sit there and stew on it? [Chaikin PowerFeed]( Why You Can't Just Blindly 'Buy and Hold' By Joe Austin, senior analyst, Chaikin Analytics Everyone is a "long-term investor"... until a stock heads south. Then things get tricky. Does that mean you should buy more shares at the lower price? Sell the whole position? Or just sit there and stew on it? When faced with a drawdown in a stock they own, investors are more likely to sell their winners and buy more of their losers. Psychologists call this the "disposition effect." When we have a gain, we get greedy. And we want to lock it in. But when we have a loss, we become hopeful. We're inclined to double down. Famed investor Peter Lynch likened this to bad gardening. In his famous book, One Up on Wall Street, he said "selling your winners and holding your losers is like cutting the flowers and watering the weeds." But when a stock goes down, we have to make decisions in a vacuum. No company is going to hold your hand... or give you a heads-up to sell. And in that void, emotions take over. So how can we make rational decisions? We have to listen to the market. And luckily, the Power Gauge is here to help... Recommended Links: [Must-See: 2024 Election Warning]( He predicted the 1998 emerging market crisis, the 2007 financial crisis, the bankruptcy of General Motors, and the recent wave of banking collapses. Now Porter Stansberry is back, sharing a new warning that he considers to be one of the most important of his 25-year career. It involves the presidential election and the shocking twist that nobody sees coming but could forever reshape the American financial system. [See Porter's new election warning here](. [The No. 1 Stock for the Rare 'Millionaire Window' Opening NOW]( According to Wall Street legend Whitney Tilson, an extremely rare window in the markets is about to open. It's an often misunderstood market setup only seen 13 times since 1920. The last time this happened, it minted a million brand-new millionaires – in a single year. But Tilson says this unique window in the markets could close much sooner than anyone realizes, leaving most investors in the dust, while making a select few incredibly rich. [Get the No. 1 stock (with 500%-plus upside potential) for this rare market event now](. For decades, "buy and hold" was gospel in investing. Big names like Jack Bogle, Warren Buffett, and even Benjamin Graham all lived by it. And it worked. Companies that did well one year tended to do well the next. And even if you were wrong, the market bailed you out. A strong market tended to lift weaker stocks. But blindly following the "buy and hold" mantra can be dangerous. A great example of this within the S&P 500 Index is food giant Kraft Heinz (KHC)... Back in 2015, Kraft and Heinz merged to form one of the largest food companies in the world. Warren Buffett loves it. Berkshire Hathaway (BRK-B) still holds a roughly 27% stake in the company. Kraft Heinz sells lots of brands we all know. For example, aside from its well-known namesake ones, it also owns brands like Maxwell House coffee, Oscar Mayer hot dogs, and Capri Sun juice. Kraft Heinz is a household name. It makes products everyone recognizes. So you would think the business would be stable. But that's not the case. Since the merger, the company has had huge problems. First, it had too much debt. Then came healthy eating. Processed cheese and ketchup weren't part of that trend. Now, many supermarkets are increasingly focused on private-label products. The stores own and sell these goods themselves. Private labels are cheaper. And in today's cost-conscious world, consumers are going cheap. When it comes to the stock, a look at the Power Gauge shows how the company's struggles have played out in recent years... In short, things haven't looked so great over the past five years. As you can see, the stock has mostly held a "neutral" or worse rating in the Power Gauge. Right now, it has a "very bearish" rating. Meanwhile, its relative strength versus the S&P 500 has been weak overall. Yes, KHC shares are up about 29% over the past five years. But the broad market is up a whopping 96% over that same time frame. That's massive underperformance. So, there's not much winning here for Kraft Heinz. But the company is far from alone when it comes to weak stocks in the S&P 500... Based on the SPDR S&P 500 Fund (SPY), the Power Gauge is "bullish" on the broad market right now. And it gives 152 holdings in SPY a "bullish" or better rating. But amid all those holdings with great ratings, our system also sees 62 "bearish" or worse stocks. Put simply, it's not enough to dump money into a big-name company that seems "good" on the surface... and then hope for the best. Today's market demands a more active approach to find the traps. "Buy and hold" just isn't working like it used to. Good investing, Joe Austin --------------------------------------------------------------- Editor's note: This kind of situation is exactly why our one-of-a-kind Power Gauge is so useful. With its ratings system, the Power Gauge helps find which stocks look poised for big upside... or big downside. Right now, you can get a full year of access to the Power Gauge and its ratings on more than 5,000 stocks by signing up for Chaikin Analytics founder Marc Chaikin's Power Gauge Report newsletter. And if you aren't satisfied within 30 days, you'll be protected by our 100% money-back guarantee. [Find out how to get started right here](. Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 -0.46% 10 18 2 S&P 500 -0.2% 152 283 62 Nasdaq -0.07% 19 63 18 Small Caps -0.7% 487 1038 395 Bonds -0.94% Energy +1.76% 1 15 6 — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish. Major indexes are mixed. * * * * Sector Tracker Sector movement over the last 5 days Energy +8.04% Utilities +2.27% Communication +0.51% Industrials -0.05% Financial -0.27% Real Estate -0.95% Health Care -1.03% Information Technology -1.94% Staples -2.02% Discretionary -2.47% Materials -2.49% * * * * Industry Focus Capital Markets Services 33 27 1 Over the past 6 months, the Capital Markets subsector (KCE) has outperformed the S&P 500 by +5.23%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #2 of 21 subsectors. Top Stocks [rating] IBKR Interactive Brokers [rating] PIPR Piper Sandler Compan [rating] BK The Bank of New York * * * * Top Movers Gainers [rating] MKTX +7.46% [rating] VLO +6.15% [rating] MPC +5.72% [rating] VST +5.65% [rating] CEG +4.52% Losers [rating] STZ -4.7% [rating] TECH -4.43% [rating] UHS -3.94% [rating] AES -3.82% [rating] TSLA -3.36% * * * * Earnings Report Reporting Today Rating Before Open After Close No earnings reporting today. Earnings Surprises [rating] STZ Constellation Brands, Inc. Q2 $4.32 Beat by $0.25 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. 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