There’s no shortage of risks spooking investors these days. Between inflation and COVID, it’s cloudy out there.
But while high quality stocks are bending, they’re not breaking! I say, no guts no glory.
Despite two 5% dips since September, the S&P 500 is close to its late-November record high. Investors are being rewarded for not being spooked by the headlines. I’ll show you why this is a great, long-term playbook for handling market volatility.
Everyone thinks the smartest people make the most money investing. It’s not true. Having the guts to stay the course beats brains any day.
The fact is this, emotions kill performance. I should know, I’ve dumped plenty of great outlier stocks as they nosedived only to kick myself later when they boomeranged back up. AAPL, MSFT, NVDA, AMD, the list is long.
It took me a while to learn to sit tight, but I’m glad I did, my returns look a lot better now.
No Guts No Glory
We all know stocks average 10% each year over the long-term, and that good years greatly outnumber bad. But most people don’t realize the S&P 500 averages 14% intra-year drops on its way to earning you that 10%.
Volatility is normal. It’s the price you pay to earn healthy returns when bonds and cash yield next to nothing. But you’ve got be in it to win it. If you can’t stomach the wild swings, you miss out. No guts no glory.
Warren Buffett famously said: “buy when others are fearful and sell when others are greedy.” I couldn’t agree more.
Fans of MAPsignals know we recommend going against the crowd. The Big Money Index is a proven contrarian signal you can use to time your trades. After stocks have been creamed, we want you buying low BMI readings. The closer to oversold the better…at least history says so.
On the flip side, when the market’s been on a tear, we want you taking chips off the table when the BMI gets really overbought – think 80+.
Staying cool when things get rocky is easier said than done. Most people need to train themselves to buy low. It doesn’t come naturally. After all, we’re wired from the caveman days to run the other way when things get scary.
But if you subscribe to MAPsignals, keep this chart handy and work on tuning out the noise. You can do it! Before long, when people ask you: “how do you invest?” you’ll tell them: “no guts no glory!”
Lastly, if you missed it, check out our video tutorial on the Big Money Index in our portal. Many have requested a walk-through especially with the recent market weakness. This is an opportune time to learn about the MAPsignals process and why the data trumps all news headlines.
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Also, you can find our other videos here.
Alec Young serves as MAPsignal’s Chief Investment Strategist. Alec is an experienced Wall Street investment strategist who has served in progressively more senior, client and media facing roles at major investment firms since 2005. Prior to joining MAPsignals, Alec spent 15 years in senior investment strategist roles at major financial firms. Most recently, he served as FTSE Russell’s Managing Director of Global Markets Research. Prior to that, he was VP & Investment Strategist at Oppenheimer Funds and served as Global Equity Strategist at S&P Global.
See his full bio here.