Are You Worried About Another Crash?
"It's not intellect that moves the markets, it's emotions." - Larry Hite
The headlines are becoming increasingly negative with COVID-19 entering a second wave and the death count now over one million worldwide.
I've also started to see an increasing amount of "forecasts" as to what stocks will be do heading into the US election. These "forecasts" are nothing but educated guesses. The reality is. No one has a clue.
If someone is telling you they know what stocks are going to do. They are lying. Period.
There are many reasons to be worried about stocks but making emotional decisions with regards to your investments is a sure-fire way to lose money.
The best way to prevent making emotionally-driven investment decisions is to prepare.
"By failing to prepare, you are preparing to fail." - Benjamin Franklin
Are you prepared for another market crash? What about a monster rally? Investors need to be prepared for both. Just ask the perma-bears how well things have gone for them since the March lows.
Being prepared doesn't just mean protecting your hard-earned money from a crash or being ready to take advantage of a bull market. It also means following proper position sizing and understanding the time frame you are trading. Both are essential in minimizing losses and maximizing your gains.
The market has been offering up incredible opportunities for those that know where to look.
The one thing that has kept me long this market and focused on long-side setups, is price.
Price and trends don't lie. They are either going higher, moving lower, or going sideways.
Don't buy into a particular narrative or bias. Being open-minded to the possibility of a crash or a continued rally is key to being able to make decisions quickly and accurately.
What you need to do in this current environment is block out the noise and listen to what the price action is saying.
For example, while sectors like oil/gas (XLE, XEG.CA) and financials (XLF) have continued to be weak, there have been great opportunities in tech-related names mostly in software (IGV) and semiconductors (SMH).
IPOs have also been extremely hot as of late.
All you had to do is follow the trend and not get caught up in the "narrative of the day".
There's always a money-making trend or a bull market somewhere.
Ignore the noise and profit from trends.
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