You may be wondering, “Buy the dips?” Well, are you good with knives? Because trying to catch a bottom can be painful. And yet, that’s what seems to be happening. Ginsu investors flailing at falling knives with cuts and scrapes like Allstate’s creepy “Mayhem” guy. Bad stuff happens. Deal with it.
Markets can be brutal for a long, long time. I’ve yet to speak with anyone who likes losing money. And yet investors make bets they can’t afford to live with on a regular basis. All of a sudden, they realize it was wrong. And I’m not talking about wrong for a few months. I’m talking years or a lifetime
And selling’s not necessarily a choice as their bets are unwillingly unwound because they were leveraged to the hilt. This isn’t a day in the park. This is hand-to-hand combat, and those trying to “hold the line” are seeing positions sold when the margin calls come in. When will it stop?
It will stop when the selling stops, whether it’s forced or done just so they can sleep at night or stop thinking about it all day. No one escapes markets like these without scrapes and bruises, if they escape at all. This isn’t a game. You can’t hide from losses in cash with inflation eroding it. What to do?
Interest rates need to be at least two or three percentage points higher. The Fed’s talking its book, talking tough, and telling the market that it will destroy inflation. But based on yesterday’s 1,000-point drop, who do you think the market believes, the Fed or inflation? Charlie Brown or Lucy?
And the outrage of lobbyists over this tiny interest rate move has the texts flying. “How dare the Fed ruin this real estate market?” Question for the Americans struggling on Main Street: Who’s reading your texts when you ask why you’re getting a pittance on your savings?
Action Line: I want you to be paid to invest in this market in the form of dividends and interest. Invest according to your risk, not what some central planner’s cookie-cutter reports tell you. Because investors always realize their risk tolerance is lower after the crash. Stick with Your Survival Guy, not the guy who says, “Our report says you should do this because history shows…” That sounds like mayhem to me.
E.J. Smith - Your Survival Guy
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