Chris’ Note: In a market like this, one of the most dangerous things you can do is lose perspective. And as a 30-year veteran trader, few people understand that better than Jeff Clark. He’s seen every kind of market, and has booked some of his best years when stocks were at their worst.
Today, in our weeklong mission to show you how to preserve and build your wealth, Jeff shares his secret for maintaining perspective…
I have a single-frame comic strip taped to the bottom right-hand corner of my desk.
It’s a picture of a man sitting at his breakfast table. He’s slumped over in his chair, and his forehead is resting on the table.
Behind the man is his wife. She’s standing in her bathrobe, curlers in her hair, and holding a cup of coffee in one hand. Her other hand is pointed upright, with her index finger extended – as if she’s lecturing.
The caption reads, “Last month you were upset because you weren’t in the stock market. Today, you’re upset because you are in it. How will you feel next month?”
The comic ran in my local newspaper back in late October 1987 – just after the crash. But it could have just as easily appeared yesterday.
Investors felt pressured to buy stocks in January. The stock market moved higher almost every day. Everybody else was getting rich. And the talking heads in the financial media kept telling us how foolish it was to be holding cash.
Today, holding cash doesn’t feel so foolish.
The lesson here is that investors should resist the urge to buy stocks (or any other financial asset) when they feel pressured to do so. Chasing stocks higher into overbought conditions is usually a bad idea.
Trading the stock market is a game that never ends. It doesn’t matter if you underperform the market for short periods of time. You’ll have a chance to outperform as stock prices revert to the mean. As long as you don’t run out of cash, the game continues.
It doesn’t matter if all your friends are making more money than you. Be happy for them. Prosperity is a good thing. But don’t let their success coax you into high-risk, low-reward trades. Envy is a horrible investment strategy.
So, the next time you’re feeling anxious, frustrated, and upset that the markets are running away without you and everyone else is making more money than you are… think back to the action in the cryptocurrencies since last Christmas, marijuana stocks since New Year’s 2018, and the broad stock market over the past few months.
Then, ask yourself… How will you feel next month?
Best regards and good trading,
Editor, Delta Report
Chris’ Note: Like Jeff said above, trading the market is a game that never ends. And in this kind of market, it’s never been more important to have a good game plan. That’s why, if you haven’t yet, we urge you to check out our Ultimate Crisis Playbook.
It lays out 24 time-tested steps to surviving and thriving in a market crash – including the five assets to own when stocks go south… how to profit when there’s blood in the streets… and even the top 10 items for a “bug out” bag. As a Daily Cut reader, you can access it for free here.