Escalation of our trade war with China.
Yield curve inversion.
Negative interest rates around the world.
Stock sales by corporate insiders.
Fears of a recession.
There is no shortage of fear and scare tactics being doled out by the financial news media these days. You’d be hard pressed to find an article with a shred of optimism.
Fear sells. It sells in national news, financial news, and your 6 o’clock local news. Know that words such as disaster, crisis, crash, plummet, calamity, collapse, and recession receive 10-20x the clicks and views than their optimistic counterparts. Google Analytics on the backend of my website shows that a simple tweak of chosen words in my blog titles will drastically affect click rates. “Prepare for Financial Apocalypse” would get many more views than “Prepare for Financial Prosperity.”
I don’t have an agenda. I don’t even have ads on my blog. Unless you are a close friend or loved one I could care less what you do with your money. I do this partly as an outlet as I have always loved to write. I also do this because I want you to learn something from one of my hundreds of blog posts. I want you to be more educated when you speak to your financial advisors. I want you to know that whatever fear the media is peddling will pass.
It always does.
As short term traders our job is to do the best we can in navigating these tumultuous, tweet-ridden waters. As investors, our job is to stay the course. If you are under the age of 50 and a casual observer of the market, you are best served not to worry. You are even better served not to try and “game” market tops. Even if you were so lucky as to pick a “top” your chances of getting back in at or near a bottom are slim to none. Your chances of continuing to invest in the machine which is the American Economy via US Stocks achieving returns far superior to other asset classes is about 100%.
If you are 50 years old and plan to retire in 10-15 years or more, market downturns are a gift. Welcome them with open arms. The deeper the correction the better. If you continue to buy and auto reinvest dividends, you will be rewarded.
Remember the last end of the world scenario we had? I do. I was in Hawaii for a friend’s wedding and had associates and colleagues texting me asking if I was bracing myself for financial ruin. I wasn’t. I was drinking cocktails until 2am with the wedding party. That “end of the world” in Q4 took roughly 6 months to pass. Six months. You effectively were given a 6 month window in which you were able to buy more of an appreciating asset at up to 20% off.
After a near cardiac arrest episode which marked the end of your trading and investing career to round out 2018, the market treated you to second discount (most likely treated as a second trip to a cardiologist). Did you miss that sale too?
There will be more of these sales (or cardiac episodes) and you should learn to make use of them. That is, if you want to be a prudent long term investor. If you don’t please feel free to sit around and bad mouth the Fed, your President, algos, and strap your tin foil hat on a little tighter. Tell yourself a “crash” is right around the corner. Tell yourself you are waiting for the bottom to buy. Hoping for a collapse in the economy or stock market is lazy thinking and an amateur bitch move.
Yeah, I said it.
Good day. 🙂
Trent J. Smalley. CMT