Hi Guys & Girls,
Please note that I emailed this article back on March 22 and just posting it here today…
It’s been along time since I emailed you but I’ve been asked a lot lately about what I think about the current markets due to COVID-19…
First let me say I don’t have a crystal ball. Wish I did:)
Anyway, I’ve seen and traded through the stock market bubble in 2000/2001 and still managed a 29% return. That’s not to brag but it was simply because I saw certain signs which I’ll share here.
I could have done way better if I acted the minute I saw the signs but
was slow to admit that the bull market party was over. Thankfully despite my stubborness I fared better than many who lost their shirts and then some…
So how did I have an idea that things could go bad in a massive stock market run up?
There were 3 signs…
- Simply that everyone was feeling like the market would go up
forever.(At least that’s what they were hoping)
- Day trading was the topic no matter where I went. At the dry cleaners to parties to standing in line at the coffee shop. Everyone was now an active trader.
- The bull market and it’s euphoria were on endless magazine covers
and the topic in the media.
Right now the equity markets have been crushed by an outside factor that was totally unforeseen.
So how does this help you?
Think about how this whole scenario makes you feel…
- Feel like the world is collapsing and the markets will keep selling off forever?
- It’s all anyone is talking about.
- It dominates the media.
We’re in a capitulation phase where the majority of investors are throwing in the towel as they feel hopeless.
I get it and feel the pain. (My retirement account is down 200K.)
To sum this up, market bubbles can be summed up as EUPHORIA and market collapses as DESPAIR.
When we get to these points a top/bottom isn’t far off.
So right now I’m looking for a market bottom over the next 7 to 10 days.
There is one big caveat to this. This huge market selloff has nothing to do with the market itself so until people feel like the virus threat is diminishing so…
I won’t jump in blindly and buy stocks as I still want to see the charts show a base forming but…
In 2 years from now we could saying wow I could have bought XYZ stock at that low of a price!
Just some food for thought…
P.S. Breath deep, take the proper health precautions and appreciate your loved ones.