I’m Not Selling Yet – And Neither Should You
Dear Wall Street Daily Reader,
I’m predicting this bull market will come to an end… and the Melt Down will begin… sometime this year.
Whether you agree or not, you might be asking a question…
“Why even participate? Why not just sell now?”
The answer is pretty simple. While I believe I know how things will play out, I don’t think I’m smarter than the market.
So instead of forcing my will, the smarter plan is to sit back and wait. If we don’t do that, we could miss out on fantastic gains.
Let me explain…
To better understand my point, you need to think about the current psychology that’s driving investor behavior.
Market commentator Josh Brown explained it best recently in his blog The Reformed Broker.
Talking about cryptocurrencies and crazy investing ideas, he said, “That sounds stupid… I’m buying some just in case.”
“With 6% economic growth, plus zero percent interest rates, plus millions of people sitting around on their phones all day speculating in stupid sh*t on the internet, your regrets will multiply daily as said stupid sh*t continues to grow…”
Simply put, you never know just how high a boom can go on. As the saying goes, “Markets can remain irrational longer than you can remain solvent.” That goes for booms, too.
And we want to be on board for as much of it as possible… no matter how stupid it gets.
Trust me, it’ll get stupid. I lived through the boom that peaked in March 2000. It was a crazy time… and the “stupid” gains were piling up.
In January 2000, I issued the most serious warning of my career to my 40,000 subscribers…
We are at the peak of most likely the greatest financial mania that will ever be seen in our lifetimes, and possibly the greatest ever witnessed…
As long as the mania continues, we’ll continue to hold and even buy the best participating companies… How can we buy stocks when we know it’s reached the mania stage? It’s easy, we have a disciplined system of investing that’s been proven to make money.
In short, we had an exit strategy – just like the one we’re preparing now, 21 years later.
Here’s how it went down back then… The market peaked in March 2000. Our exit strategy signaled for us to get out of most of our positions in April 2000. At the time, selling our positions because they hit their trailing stops felt like I was failing my readers. Times seemed so good. It felt so wrong to sell!
But in the end, it was by far the right thing to do. I had no idea that the market would keep going down, and down, and down… eventually bottoming – years later – in 2003.
This Melt Down will be brutal too. It could last for years… which means investors are potentially facing years of poor returns. This could be the last chance many of us get to make irrational gains in the U.S. market.
So just like I did in 2000, in the last Melt Up, I will follow my trailing stops… And GET OUT WHEN THEY ARE HIT.
That is our exit strategy. It is the only thing that will protect the gains you have made… and keep you from losing more money when the Melt Down arrives.
If you follow this plan, there’s no reason to simply sell today. Instead, your plan should be to ride the Melt Up as far as you can… and use your exit strategy (trailing stops) to pocket your gains.
Things could get stupider from here. So don’t sell yet. But have a plan for when the time comes.
Editor, Daily Wealth