This week we saw a crash in the stock market similar to that of Crypto (down half from most of their highs) and people lost their minds. CNBC (fake news) had reports that this was just the beginning of things to come. Crypto folks were throwing a party because misery loves company. I, on the other hand, did not lose sleep, similar to Jesus in the ship when they were going through a storm. This blog will talk about why I am not worried about no darn stock market crash.
Market always comes back
The only people that lose in crashes are the people that lock in their losses by selling at the bottom. These folks fall into the buy high sell low thinking that is extremely hard to fight because you want to protect the little money that you have left. Its hard buying when its low and its hard holding when it is low because you see your capital slowly going away.
When I first started trading I would buy what was hot and popular, lose my shirt and then when it crashed I would lose. I learned by getting burned. Now I see things a lot differently. I see crashes as opportunities (one reason I am not afraid of a crash) because the market always comes back.
We have seen the market come back time and time again. This is why I am afraid of crypto is there is no track record and no proof of concept. In stocks I KNOW that you can look back 100 years and track the market from crash (great depression) to crash (1987) to crash (dotcom bubble and housing crisis) and see that the crash is never permanent. It always comes back. The stock market is now astronomically higher than where it was at each of those times.
If it does crash we just buy more
Since we know that the market will come back the next thing we have to do is bet on the comeback and take advantage of the lows. The stock market is the ONLY market where prices come down and consumers run out. The stock market is just like any other market. We can’t set it and forget it. You must be aggressive when opportunities present themselves. People who bought those lows are very happy two days later after things returned to normal.
The market not only comes back but it bounces back higher
One great reason to hold is that when the market comes back it goes higher than where it fell and this is an opportunity to make money. When the market crashed most recently (2008ish) the Dow was around 14,000. The Dow is now around 25,000. If you sold, you lost half, if you held, now you have nearly doubled what you had. If you held and bought more, congrats you are retired.
The key is to not play into the “FUD” as cryptos call it. This is fear uncertainty and doubt. When I first started investing I would watch a lot of CNBC. Now, I don’t ever really watch it. I watch the market and I read the articles and I listen to the conference calls. CNBC is just like every other news source and they feed on scary news. Scary news gets people to tune in which gets them ratings. I am sure that the entire day of the plummet people were beat over the head with fear and uncertainty. If you got all your news and information from CNBC you lost.
I have been trading for about 10 years. I was out selling stocks and mutual funds at a time when NOBODY wanted to invest. I think proceeded to see ALL of the missed opportunities that people failed to take advantage of out of fear. This experience of the fall and the rise again makes me no longer afraid of big crashes. If anything I look forward to a big crash.
I am a professional investor. This means that I make money no matter which way the market goes. So if the market stays where it is, we make money. If it crashes, we make money, if it does nothing, we make money. The key is taking advantage of what comes not being a victim of what comes.
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Be great, invest well,