Market Talk
No one can predict the future.
Markets have a way of changing faster than most expect.
But when pundits and investment centers begin to ponder the direction of things, it is usually worth paying attention.
There is no doubt here at the Jones Report that last year, 2024, was an excellent year for several of the stocks we have been watching. Some stocks across sectors — like Kinross Gold, Lam Research, and KTOS — saw gains of 400% and more.
Some may have already noticed that many of those gains from 2024 have begun to slip.
Markets rarely stand still for long, and lately the tone of the market appears to be shifting.
Let’s start with the boom of AI, with a pinnacle of results from the provider of chips that allow ultra-fast processing — like the NVDA chips. But building giant data centers takes humongous energy, to the level of what entire towns and even cities consume.
So the next phase began to raise questions. The enormous cost of building and powering these AI systems started to come into focus. Many of the behemoth industries are now planning their own unique development of AI — whether data centers or specialized applications — and the scale of the investment required is enormous.
This phase caused companies like Oracle (ORCL) to drop over 100 points in just a few months. All the while the overall market was floating high on the averages. Oracle was not alone — just one example.
So this AI question phase led into the notion of what many have called a “priced to perfection” market. We even saw a few days of “sell everything” behavior affecting a good share of stocks as investors began reassessing valuations.
And then events overseas added another layer of uncertainty.
Negotiations between the United States and Iran deteriorated. The United States determined that Iran was not negotiating in good faith even as their main nuclear enrichment facilities had been destroyed. The situation escalated quickly.
It is now the thirteenth day into the conflict and Iran’s military machines have taken heavy damage. But the fight is still there.
Military forces can sometimes be weakened quickly. But conflicts rooted in long-standing ideology and history often take much longer to resolve. That reality alone can introduce uncertainty into markets that may last longer than a few weeks.
Naturally, uncertainty like this causes money managers at major investment centers to raise their eyebrows and sometimes pull back, as concerns begin to surface about inflation, stagflation, slower economic growth, or even the possibility of markets shifting toward wartime-style investing.
Two articles appearing today from Bloomberg also report that investment centers are beginning to discuss a more cautious outlook for markets. When large financial institutions begin raising these kinds of questions, it becomes another signal worth watching.
In today’s headline-driven markets, sentiment can shift quickly with a single announcement.
Markets sometimes change character slowly — almost a kind of devolution in sentiment — where enthusiasm begins to give way to caution and investors start reassessing risk.
If large money managers begin leaning toward shorting the market en masse, that alone could accelerate the process and lead to a more serious correction.
So how does one stay involved in stocks during times like this?
The stocks mentioned here are simply examples of some of the long-standing names we have been watching and covering here from time to time at the Jones Report. After all, the very idea behind Stocks to Watch has always been simple — stay watchful.
One approach may be to stay involved while maintaining smaller positions.
For example, the Strait of Hormuz remains a trouble spot that affects world markets in oil, fertilizer, and energy supply chains. With the United States holding vast oil and gas reserves, some investors may keep an eye on the domestic energy sector. A small stake in a company like Devon Energy (DVN) might be one way to stay involved.
Others may look toward interest-bearing securities that provide income while markets sort themselves out. A company like Altria (MO) has long attracted investors seeking yield. There are also higher-yield income securities in the market that some investors keep an eye on. One example is METCI, which carries a yield in the 8% range, though securities like this often require investors to pay close attention to the underlying business risks.
And if speculation on technology remains in play, some may continue watching emerging tech names. One example that has been covered here before is Navitas Semiconductor (NVTS), tied to the power and efficiency side of the growing AI infrastructure buildout.
Another sector worth keeping an eye on is gold and the miners. While the miners are not getting the respect of their higher earnings, sustained higher ranges in gold prices could eventually begin to be recognized by the market.
Gold may move in a more balanced fashion, while the miners are behaving more wildly.
Holding some shares in stocks like Kinross (KGC) and/or Hecla (HL) through the volatility may prove to be the long win over time. At the same time, the swings in these shares can hurt the balance in the near term if positions become too heavy.
Sometimes it becomes a hard decision to let a position go and revisit it later. For some investors it may call for trimming an overweight position to preserve dry powder.
In times of uncertainty, gold often finds its way back into market favor.
The point is not to load the boat when volatile markets can quickly work against traders.
Perhaps it is a matter of staying involved — but with smaller positions, careful selection, and some dry powder.
Nothing is certain in markets. Things sometimes change faster than we can see at the time.
However the twists and turns of the future play out —
Stay watchful.
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More later so ....Stay tuned, if you dare!
For now, we close by noting that any view on the market and stocks on any particular day may change in the days to come. That is why we watch and see how our views match up with reality. Looking ahead a few months may be a way to do things - but thinking too deeply about world events and the recent alliances forming, can make projecting ahead a dicey endeavor.
All in all - we use the word maybe "some", not "too much" and play it accordingly. Never get arrogant in our notions because things do change - and individual stocks are subject to many factors outside our control. So, we try to -stay aware.
With all the above caveats and attempted prognostications, I will close this post. Stay tuned for more opining on the market and stocks to watch.
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