The 12 Sells Of Christmas

Dec. 20, 2017 6:05 PM ETAET, CVS, SPY, VOO, WBA, WMT, BMY, CAT, CI, DUK, FE, HAL, HUM, LLY, MO, PFE, UNH, WYNN233 Comments


  • As the bull market continues to rally to record after record, more and more stocks are becoming overvalued.
  • Eventually, valuation always matters and reversion to the mean is inevitable.
  • Often stocks revert below the mean on economic or political events, such as recessions or wars.
  • Here are 12 loved stocks that you should sell to Santa Claus because he can afford the coming corrections more than you can.

Remember this chart from 2005 to 2007? It is what the S&P 500 (SPY) looked like then:

^SPX 2005-2007And here is what the S&P 500 (VOO) has looked like the past 3 years:

^SPX 2015-17Those are not exactly mirror images, but I think you can see the similarity.

Here is the S&P 500 Cyclically Adjusted Price-Earnings Ratio or CAPE:

CAPEIn the S&P 500 today are dozens of stocks that are very overvalued against future earnings expectations. And in many cases, those expectations are too high to begin with, hence the CAPE ratio which takes into account earnings over a full cycle.

So, I've decided today to lay out "the 12 sells of Christmas," primarily using charts because sometimes a picture is worth a thousand or million words, or at least a few bucks. I'll toss in a summary bear thesis as well.

Most of these companies are very loved by investors. Many will scream "buy and hold forever" after each name. I'm sorry, if I know something is likely to drop over 20% and possibly more, I'm a seller.

Very few people are actually in a position to hold through a big correction like the ones we had from 2000-2002 and 2008-09. For those who can, bully for you. If you can't stand the pain of likely losing 20-30% or more of your money on these stocks and the several years it will take to make the money back, then you should either sell, or at least take your profits off the table from the past few years and hold some cash.

As I'll discuss in my upcoming article "The Futility of Forecasts & My Forecast for 2018" I believe we are at or near the inflection point that leads us to a recession (or two) and a bear market (or two). If you need to

Through New Year's Eve, "Margin of Safety Investing" will be available to new subscribers for only $365 per year. On January 1st, the rate rises to $499/year. I use access to multiple top research and analysis services and a growing staff of analysts, combined with my "Core 4 Investing Method" and insights of 25+ years of experience to find some of the best asymmetric opportunities with the least risk possible. See my top-ranked history on TipRanks and read archived articles at MarketWatch where I was named "The World's Next Great Investing Columnist."

This article was written by

Kirk Spano profile picture
Join MarketWatch Award Winner Kirk Spano For More Profits & Less Risk.

25+ years of beating markets with less risk.'s "The World's Next Great Investing Columnist" & publisher of Margin of Safety Investing.

Get my sought after Macro view, analysis of secular trends, ETF asset allocation, my top growth & dividend stocks, as well as, option selling for making more retirement income.

I own and operate Bluemound Asset Management, LLC - a boutique registered investment advisory that manages and consults on 9 figures of wealth. I was lucky to have several mentors who managed billions of dollars, including, one who literally helped write the book on option selling. I have now managed money since the 1990s through several major market cycles. 

In the past decade I was able to work on investment and real estate projects with several private equity firms, hedge funds and family offices. Since 2011, I have been widely syndicated and appear as an investing expert in the media. 

Follow my work, as I try to help you make great returns with less risk.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own a Registered Investment Advisor - - however, publish separately from that entity for self-directed investors. Any information, opinions, research or thoughts presented are not specific advice as I do not have full knowledge of your circumstances. All investors ought to take special care to consider risk, as all investments carry the potential for loss. Consulting an investment advisor might be in your best interest before proceeding on any trade or investment.

Recommended For You

Comments (233)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.