"Meet me after the markets close, at the wine club on 100 Lombard Street," Mr. X told me last month in Toronto.
"I'll be there," I said. (What I wanted to say was, "What the heck is a wine club?")
Sure, it was mid-winter – in Canada. But I wouldn't have missed it for the world...
I wasn't going to pass up a chance to meet up with Mr. X. You see, when I started out in the investment business in the mid-1990s, he was my biggest mentor...
He taught me that the concept of market sentiment is a bit like the game of poker...
It's not the particular hand you have that matters... It's not even how you bet on that hand that matters. What matters is outmaneuvering what the other guy is thinking about your thinking – and making money from that.
That's the big lesson I learned from Mr. X. And I still check in with him every couple of years to see what he's thinking.
When I met with him in Toronto last month, I was ecstatic to hear he sees the same opportunity I see in U.S. stocks...
"How do you feel about the markets today?" I asked Mr. X at his wine club, as I cut a slice of stinky cheese with an oddly shaped knife.
Mr. X didn't know about my Melt Up thesis. And he didn't know that – in the week after Christmas – I had just put more money to work in stocks than I ever have... at any time... in my life.
Without hesitation, Mr. X said, "I have never been more bullish than I am today about U.S. stocks."
Steve, people were already nervous – BEFORE stocks started plunging almost daily until Christmas. By Christmas it was out of control – investors were more scared than they were even when the market bottomed in 2009 after the Global Financial Crisis. It was crazy.
And then he took it to the next level...
The thing is, the bust wasn't THAT bad. It didn't even reach bear market levels. But the perception of the bust was far worse than the actual bust. That tells me the market itself is much stronger than people's perceptions of the market. This is what you want to see. I have never been more bullish on stocks.
Mr. X said it more eloquently than I ever could.
In the mid-1990s, Mr. X taught me that investor sentiment matters in the markets – more than anyone can imagine...
My investment mantra is "cheap, hated, and in the start of an uptrend." The "hated" part got in there because of Mr. X. It's the gap where investor perception hasn't caught up to reality... the secret to contrarian investing.
I saw the setup after Christmas that Mr. X taught me to look for. And I went in – big time. It turns out Mr. X taught me well – as he is right there with me, today.
I knew investors were scared. The "other guy" in our poker game wanted nothing to do with the stock market.
That's why I've put my money where my mouth is...
After the Christmas bust, I personally put more money into U.S. stocks than I ever have – by far.
Sure, the market has run up since then... and sure, stocks might take a breather for a couple weeks. We can't know for sure.
But I am in for longer than a couple weeks... I am in for the Melt Up. And after the Christmas extreme in sentiment, I am invested – in the biggest way I've ever been, by far.
Mr. X – my mentor – is in, too. Are you in yet?
If not, why not? Don't you see it too? Don't you feel the fear? And don't you know that this is exactly what you want to see to win the poker game of the markets?
Please, don't miss out. Take advantage of this great moment! The Melt Up is in front of us... not behind us.
P.S. I recently urged my True Wealth readers to take advantage of the upside in stocks... in a corner of the market that might surprise you.
It's a "Mr. X"-like idea... with a huge gap between perception and reality. And we plan to profit with the best company in the business. To learn more about the opportunity I see in stocks – and how to gain access to this recommendation – click here.
"That 'scared as hell' sentiment is what I love for as an investor," Steve says. Learn more about why he recently "backed up the truck" to buy stocks right here: What I'm Doing With My Own Money Right Now.
"If you want to know how investors really feel, look at what they're doing with their money," Brett Eversole writes. Learn more about a rare event he recently saw in the markets – and what this could mean for stocks in the coming months – right here.
NEW HIGHS OF NOTE LAST WEEK
E.W. Scripps (SSP)… media
New York Times (NYT)… media
Procter & Gamble (PG)… consumer goods
Rent-A-Center (RCII)… rent-to-own furniture
Fastenal (FAST)… tools and fasteners
O’Reilly Automotive (ORLY)… auto parts
Lennox (LII)… HVAC equipment
Waste Management (WM)… trash and recycling
Waste Connections (WCN)… trash and recycling
Boeing (BA)… “offense” contractor
Booz Allen Hamilton (BAH)… “offense” contractor
Mercury Systems (MRCY)… “offense” contractor
Mettler-Toledo (MTD)… scales
Agilent Technologies (A)… lab equipment
BioTelemetry (BEAT)… health care
Waters (WAT)… health care
Anthem (ANTM)… health insurance
W.R. Berkley (WRB)… insurance
Exelon (EXC)… utilities
Fortis (FTS)… utilities
Canadian Solar (CSIQ)… renewable energy
Kirkland Lake Gold (KL)… gold
NEW LOWS OF NOTE LAST WEEK
Take-Two Interactive Software (TTWO)… video games
Activision Blizzard (ATVI)… video games
Sony (SNE)… video games
GameStop (GME)… video-game retailer
Urban Outfitters (URBN)… clothing retailer
Signet Jewelers (SIG)… jewelry retailer