I’m back home now after last week’s trek to Sin City for the Las Vegas Money Show. While I was there, I had the opportunity to give a seminar with the timely title: Worry no more about a down stock market.
Well, my seminar happened to fall on the same day that the Dow Jones Industrial Average plummeted 214 points — its biggest one-day point loss in over three years! As you can probably guess, the house was packed. It was standing room only, as hundreds of Money Show attendees rushed to hear what I had to say about the current downtrend.
In this workshop I discussed what investors need to do if they want to sleep well at night. The first thing everyone needs to realize is that they must have a bear market investing strategy in place. This includes preset stop-losses on all equity positions, the willingness to use unconventional investment vehicles, and the ability to remain patient in the face of market despair.
Before I go on, let me just say that I am not claiming that this current correction is in fact a full-blown bear market. It definitely has the potential to become one, but we just can’t say for sure yet if we’ve got a genuine bear in our midst.
What we can say for sure is that if things continue to get worse, there are steps you can take to protect yourself against the pernicious wealth-killing affects of a prolonged market selloff.
The hard reality for investors is that every bull market comes to an end, and it could very well be that we may indeed be witnessing the end of this bull market right here, right now.
Now, if you go by the technical indicators out there, this market is due for a bounce. The extreme oversold environment we’re experiencing is setting up a strong possibility that stocks will rally soon. Unfortunately, at least so far, someone forgot to tell the markets that they are due to move higher.
And that is another hard reality for investors to accept, namely, that markets don’t always do what they are supposed to do. Sometimes the market can be as uncooperative as a yet-to-be housebroken puppy, acting out the way it wants to regardless of what everyone is trying to get it to do. The best strategy here is to be prepared for whatever the markets do, be it a bounce, or a crushing continuation of this slide.
Right now Successful Investing subscribers are well protected against the ravages of this market with our low allocation to equities and our high cash position.
We’ve also got a plan in place that will keep us from experiencing the extreme downside in equities if, in fact, this correction turns into that much feared bear.
Now more than ever, you cannot afford to follow Wall Street’s "buy the dips" mantra. Times like these call for a proactive, objective and proven plan that will protect your wealth when things are tough, and get you ahead of the herd when things are running strong.
When you invest, you’ve got to decide if you are going to be a trend follower, or if you are just going to follow the herd. The two concepts are very different, and the distinction between them is the difference between a three-decade record of market-beating returns, or what the average investor achieves—-or rather, fails to achieve.
For more on this difference, and for more on how to manage your risk the Successful Investing way, click here: