Beware the Coming Crash: The Bull Market Won’t Last Forever…
Dear Penny Stock Millionaire,
Last week I traveled back to the U.S. from Nigeria where Karmagawa built another school. From Nigeria, I made my way to Los Angeles.
I won’t be traveling as much this year. That’s not necessarily less time outside the U.S. — but fewer travel destinations.
In 2019 I visited 32 countries. That’s excessive. My goal in 2020 is to cut that number in half. My plan is to stay in a country longer. For example, I already have two trips planned for this year where I’ll stay an entire month in one place. I’m looking forward to that!
I’ll also be back in the U.S. a little more, too.
In a way, it’s very similar to when I tell students to test different trading strategies and then hone in on what works best for them. Last year I was honing in on the best charities for Karmagawa to partner with… and I was honing in on the best places to hang out.
You’ve gotta hone in on your favorites.
Let’s get right to a few questions I’ve received to start 2020…
“Tim, you said you’re rusty trading a big account, how will you trade if you’re rusty?”
Yeah, I said originally it would be $1 million and then lowered it to $500K because I’m rusty. And there’s a big difference between trading with a small account vs. a big account.
The most important thing is just waiting for the best plays. It’s a little scary trading with a bigger position. But at the same time… I used to trade with big positions. So it’s just a little bit of rust.
It’s not like one day I’ll say, “OK, I’m gonna trade with a big account now.”
I’ll be disciplined. And I won’t force it. I’ll wait for setups to come to me. And when that happens we’ll see how good the setup is and whether I want to use $50K, $100K, or even $200K on the trade.
But there definitely is a little rust. It should be interesting.
Why You Should Start With a Small Account
If you’re a student … and you’re wondering if you should trade with a small or big account. I most definitely think you should start small and build your account.
As you build your account you gain experience. You get know-how. There’s no rust if you’re building your account from small to big.
For me… I’m going backward. I’m just a weird teacher donating all my trading profits to charity. But you don’t have that problem.
You should start small and gradually build up. Then there won’t be any rust. (At least, there shouldn’t be.) You’re gonna build incrementally — hopefully.
“Tim, there seem to be so many plays right now it’s overwhelming! What should I do?”
Don’t fear missing out. Fear of missing out (FOMO) is a real thing with traders. They see a stock running, or maybe they’re watching it. And then, for whatever reason, they don’t execute. Or maybe life gets in the way. Or they try to take the trade but can’t get executed.
Then they feel guilty. Or they feel they deserved to get that money.
There’s always gonna be another play. And if a play happens without you in it, but you were on the right track … be happy. Get more determined to not only be on the right track in the future but to actually execute your trading plan.
The Market Doesn’t Owe You Money
A lot of newbies get discouraged when they don’t make the money they feel they should. You gotta change your perspective. And you gotta change your mindset. You don’t deserve profits from the market.
You have to prove to yourself that you have enough knowledge. You have to prove to the market that you’re ready and that you’re gonna execute.
This is important … knowledge and execution are two separate things. Get prepared — then execute. If you’re prepared, that’s a good thing. Most don’t make it that far. A lot of people never prepare and they never execute.
So if you’re at least prepared … you got one out of two. You gotta work on the other: execution.
“Tim, what’s one thing I should know about trading going into 2020?”
Well, there are a lot of things you need to know. But if there’s one thing I can pass on, it’s this: not all years are created equal.
The higher the current market goes, the more conservative I get. I really think we’re due for a pullback or a crash.
Be careful. Some people have this mentality of “OK, I missed this bull market … it’s time to get more aggressive.”
That’s like missing out on a supernova and then chasing it right before it’s about to crash.
So, be conservative. Recognize this year’s place in history. We’ve had over a decade of a bull market. And sometimes when there’s an extended bull market — right near the end — the entire market almost looks like a supernova as people pile in. That’s a dangerous time to be chasing.
Also, be aware of what’s going on in the world. We started off 2020 pretty strong until the market reaction to a possible war with Iran.
Just be prepared for a crash. Even if we finish up at the end of 2020… it could happen at any time. It could be at the beginning of the year. Or maybe it’ll be in the middle or near the end of the year. But we’re due for something big and major.
The Bottom Line
Don’t get too aggressive or too cocky. That’s a good way to set yourself up for failure. Take it one trade at a time, and don’t worry if you miss one!
And as always, remember to take profits along the way. If a trade meets your goals, don’t get greedy.
Take singles and doubles along the way, and don’t get sucked into trying to hit a home run every time. If you want to trade long term, trade conservatively.
Editor, Penny Stock Millionaires