Wyatt Research Week in Review: Jan. 10-16

Seldom have diverging fortunes been presented in such immediate and ironic relief as this past Wednesday.
On that day the Dow Jones Industrial Average fell 2.2%, the S&P 500 dropped 2.5% and the Nasdaq Composite Index shed 3.4%.
For investors who took it on the chin during a historically awful opening week of 2016, the Wednesday flogging was particularly painful after a two-day market respite.
Yet three people woke up Thursday morning filthy rich.
I’m referring of course to the lucky ducks in Chino Hills, Calif., Munford, Tenn. and Melbourne Beach, Fla. who were the three winners of the record $1.6 billion Powerball jackpot.
When divvied out, the pretax windfall equals roughly $533 million per winner annuitized, or about $327.8 million as a lump sum payment.
Even if you didn’t buy a Powerball ticket before the drawing on Wednesday evening, I’m guessing that at some point in your life you fantasized about what it would be like to have an obscene amount of money at your disposal.
So, what would you do right now if suddenly handed a huge wad of lettuce?
We all know what not to do. We’ve heard the horror stories of multimillionaire rock stars or professional athletes blowing their riches on mansions and sports cars and subsequently declaring personal bankruptcy.
But after you’ve taken such responsible measures as paying down any outstanding debts, the question remains: Should you put your money to work in the current volatile market?
History tells us that we’re on borrowed time with the present seven-year bull market. We could very well be entering a bear market in 2016. Then again, we might not. History has been known to rewrite itself.
But the key to any market downturn is to attempt to find value where there’s value to be had. Buy when there’s blood in the streets, as the old cliché goes.
Our old pal Warren Buffett did just that recently.
According to SEC filings, Buffett’s Berkshire Hathaway (NYSE: BRK-B) purchased 5.1 million shares of oil refiner Phillips 66 (NYSE: PSX) between Jan. 4 and Jan. 11, for a sum of around $390 million.
Of course, Buffett could be wrong on this individual stock or even the sector. Oil could stay lower for much longer.
But in terms of a general market strategy, I’m siding with the Oracle of Omaha on this one.
Now if I could only get my hands on $327.8 million in capital…
Here are some of my favorite Wyatt Investment Research articles of the week:
SELL EVERYTHING!! – It’s a sign of the times. When in doubt, be as outrageous as possible. After all, competition for attention is fierce.  Hence the immediate and universal attention heaped on Royal Bank of Scotland with its “sell everything” proclamation in a Jan. 8 note to clients.  So, what does RBS see for the future that set cyberspace aflutter?
Do You Own Stock Market Insurance? – When Harry Markowitz came up with the Modern Portfolio Theory in 1952, he wasn’t privy to the ultimate way to truly protect one’s portfolio. That’s because the best way to insure against downside risk did not exist in 1952.
When Volatility Hits, Consider Pairs Trading – At times like this, it’s worthwhile for traders to consider pairs trading – i.e., matching sectors that have consistent patterns of negative correlation.
Will the Commodities Sell-Off Continue in 2016? – No look at the global commodities sell-off would be complete without a discussion of the precipitous decline of oil. But certain soft commodities look like they could have the most long-term upside.
What Stock Investors Can Learn From Real Estate Investors – Real estate has a significant advantage over stocks: It lacks liquidity and continual real-time pricing. Because real estate is bought for income, investors benefit from its inefficiency, since inefficiency is a form of self-binding – a useful, but underappreciated, technique for achieving long-term goals.
Will the Campbell Soup GMO Stand Be Mmm Mmm Good for Shareholders? – While most giant food corporations have remained silent on the GMO controversy, Campbell Soup Co. (NYSE: CPB) is breaking away from the pack by taking a firm stand. Campbell recently announced that it will begin disclosing the use of genetically modified organisms in all of its products in the United States. Will it help the company recapture some of the customers it lost over the past few years?
Saudi Aramco IPO Would Mean More Pain for Oil – The Saudis are mulling over listing their crown jewel – Saudi Arabian Oil Co., better known as Saudi Aramco. The world’s most valuable oil company, Saudi Aramco produces 1 in every 8 barrels of the world’s oil. If the Saudis listed the entirety of the company, its worth would likely be a few trillion dollars. That scenario is highly unlikely, but even a partial IPO would wreak havoc on the oil markets.
Buying Opportunity From Earnings Bust – Earnings season bellwether Alcoa (NYSE: AA) got pummeled Tuesday despite an earnings beat, creating an intriguing buying opportunity for brave value investors.
Have a great weekend!