Trouble Is Coming, Buy Stocks!
Italian ghost towns. Japanese “hibernation.” Iran’s health minister with the virus on live television. North Korea shooting its first victim. Body burning in Wuhan detected via satellite. An entire South Korean doomsday cult diagnosed. Can you tell the scare stories from the real reports? Most investors can’t, and that’s why stocks are extending their worst rout in five years.
US stock markets plummeted again yesterday to take investors 6.3% lower than recent all-time highs. Those losses put us back where we were three months ago, wiping out all of the year’s gains so far.
The US Center for Disease Control and Prevention has told citizens that human trials on a vaccine are six weeks away, while concurrently telling them to brace for a pandemic. President Trump’s speech on the subject was ignored, and the International Monetary Fund (IMF) is bearish, but the Federal Reserve says it’s “still too early” to drop interest rates. Investors need to be quoting Sun Tzu before that happens!
The first few rounds of investors who bought the dip are probably getting nervous about now. That, or they’re hoping for even lower prices. Don’t let analysts tell you if the worst of the sell-off is yet to come, especially if they never saw it coming in the first place. Now’s the time to stay in control of your emotions. This is not what 1929 felt like!
Scribble down what stocks you’ll buy and sell if they fall another 2% by today’s close, 10% by next week’s, or 60% by next month’s. Many investors are hedging their portfolios with rising gold and taking short positions in cyclical stocks like Apple and AMD that require a strong economy.
Others are buying recession-proof companies like discount retailers and utilities. Bonds are back in fashion, and even inverse trackers of the market exist to help you profit from every downward tick. The main instrument is the ProShares Ultrashort S&P 500 exchange-traded fund, currently with $2.4 billion of Invstr fantasy finance invested.
Stop. Think. Act. There’s more to this than blind panic selling!