Investors have only two choices right now in terms of how they interpret the last two weeks of market action:
- They believe in the comeback, the thesis that says that this is an intensive correction, a dreadful and bitter sell-off, but not the end of a cycle.
- We’ve hit a wall. A bear market is upon us.
If they believe that a bear market has begun, this is cashing-up time.
Opportunities will begin to appear as valuations come back to Earth and companies’ CEOs raise dividends instead of buying back shares.
In bear markets and sideways markets, management tends to elevate the dividend distribution, if possible, to entice investors who want the yield.
If last week’s action didn’t convince investors that this was the euphoric bubble bursting, the right thing to do is man up.
Control your attention, as this might have been the last big buying opportunity of this cycle.
Eliminate all negative influences from your mind because this could be a real money-making year.
In fact, history says that we’ll be hitting new all-time highs by January 2019.
Portfolio Wealth Global has stressed the importance of having a plan in mind, a watch list of companies with the intent to own them as corrections make their prices cheaper and their values bigger.
Don’t deviate from that plan.
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One of the best ways to hold the line, stay focused, and execute a plan is to reveal it to a good friend, a partner, a family member, or to your spouse so they can keep you in check.
It is also extremely lucrative to have faith in what you’re doing and the principles you’re following.
When Warren Buffett bought shares of Coke following 1987’s Black Monday, he was so aggressive that the company’s heads called him to see if Berkshire was the mysterious buyer that was purchasing millions of shares when countless investors were selling like there is no tomorrow.
So, the best thing to do is to continuously take action. In terms of your holdings, go check them out with your own two eyes. For example, I own shares of Abbott Labs, which produces Similac, so I went to several pharmacies to see where the products are placed, how sales people treat them, and what mothers prefer.
Do your own research on your assets and do some “real-world” due diligence so you understand that stocks represent real businesses.
Short-term volatility does not equal long-term trends at all. In fact, quite the opposite is true.
Research Partner, PortfolioWealthGlobal.com
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.
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