Buy Fear, Sell Euphoria: Two High-Conviction Plays

Well that was fun.

The S&P 500 fell 1.7% yesterday, it’s worst daily performance in four months. Fears over contagion related to the collapse of Chinese real estate giant Evergrande fueled the selling, as the Hang Seng Index plunged 4% as investors braced for default.

But if you read last Thursday’s Evergrande Gameplan, you should have been well prepared for the pullback. In the alert, I mentioned investors should compile a list of companies they want to buy on the dip. Because even though I expected stocks to have a mild pullback, I believe the bull market is alive and well for the following reasons:

• Corporate earnings are currently firing on all cylinders
• The US labor market is improving with weekly jobless claims falling
• Interest rates will remain near 0% until 2023
• Investors are fearful...