Is Your Portfolio Prepared For The Next Leg Down?
The stock market has fallen 30% in just 19 trading sessions. That’s wiped out the last 3 years of stock market gains!
I prepared my subscribers for this AHEAD of time, so they were in cash in their 401ks/IRAs and not getting hurt by this stock rout. So…what happens next?
Downtrends in markets tend to unfold in three different waves/phases. We’ve completing the first down-wave now (or fairly soon). Next, comes a “bear market bounce”. These “appear” bullish but are not. Why? They’re not bonafide buying but rather, short-covering rallies. Those are pros that have profited from the first down-wave, locking in profits by closing out their positions.
Those “bear market bounces” also known as “bull traps” suck novice investors back in because the appear bullish due to their sharp, volatile rises. They wrongly take it as the signal “that the bottom is in”. And…these bear market bounces have sometimes historically lasted for some months, further reinforcing their thesis. However, then the final down-leg unfolds and retests the former lows (and usually then some).
That’s when these investors tend to freak out, cash out and practically swear off stocks. It’s when the sentiment gets that bad and the stock market valuations are that cheap, that the pros start to step back in. That last leg could potentially be another 10-30% lower, just based off of the last two bear markets in 2000 and 2008. (In the chart below, you can see how all of this could play out).
So…the question is: Is your portfolio ready/prepared for the next leg lower? If not, or if you’re not confident that it is…then you should consider joining us in the Logical Investor newsletter and see how we’re structuring our portfolios so differently than most. We’ve got defensive plays that others don’t. We’ve got lots of cash set aside, while others are fully invested. We’ve got really large dividend yielders when most people have lesser yields, if any. And most importantly, we bought all of these stocks at value prices whereas most people are holding overvalued stocks that could take many, many years to come back.
Some of the last bear markets took people 8-13 years just to get back to breakeven. Don’t let this be you! Come join us and learn how to think like a professional investor and reap better results and grow in your confidence.
Here’s where you can find a sample newsletter (back-issue): https://logicalinvestor.net/investing-basics/sample-newsletter/
For just $17 per month, you can learn a new way of thinking about your investing that can totally change your portfolio results over time. No contract. No commitment. Cancel online any month you like.