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The Inevitable and the Impossible
From Baltimore – Every successful investor must be able to acknowledge two fundamental market realities, one of them inevitable and the other impossible.
Market corrections and bear markets are inevitable. Predicting them with any accuracy is impossible.
If you can internalize these two truths and act on them, you’re on your way to building lasting wealth and achieving the financial freedom we all desire.
That’s the topic of today’s Market Wake-Up Call discussion between Chief Investment Strategist Alexander Green, Chief Income Strategist Marc Lichtenfeld, and Associate Franchise Publisher and host Rachel Gearhart.
Market valuations are extremely high right now. The authoritative cyclically adjusted price-to-earnings (CAPE) ratio indicates that they’ve been higher only twice before: on the eve of the stock market crash of 1929 and at the height of the dot-com mania in 2000. Take a look for yourself…
Since the COVID-19 market crash of last February and March, the market has regained a very scary altitude. But does that mean a correction is in order at some point?
Yes, it does.
Rachel puts that very question to Marc and Alex…
“Could we get a pullback this year? Absolutely,” says Marc. “It wouldn’t surprise me at all.”
And yet, we can’t accurately predict when a correction will happen or a bear market will begin. All we can say is it’s possible this year.
“You can’t know in advance when the pullbacks are actually coming,” Alex says.
“You can never try to time the market. It’s a futile act,” Marc adds. “It never works out.”
In fact, it’s just as possible that we’re at the beginning of a big expansion. “[There are] reasons to believe the market could head substantially higher from here,” Alex says. So selling now because of concerns about valuations could cause you to miss out on quite a bit of upside before the next correction or down market.
The Scout Motto
So what can you do to participate in a rising market while also protecting your hard-earned wealth from a pullback?
Observe the Scout motto: Be prepared.
In fact, three of The Oxford Club’s Four Pillars of Wealth are designed to help you achieve just such a state of preparation.
First, stick to The Oxford Wealth Pyramid, which allows you to diversify across asset classes and investing strategies so that if one part of your portfolio decreases, other parts will hold steady or even increase.
Regarding the types of assets you want to own, Marc says that “as an investor, you shouldn’t be dogmatic.”
“You should have a well-diversified portfolio,” he adds, so that something is working in all markets: bull, bear and in between.
Next, know your exit strategy… and stick to it. Anyone can buy a hot stock or fund, but the real art of investing is knowing when to sell. As Alex says in today’s video, everyone talks about being a better stock buyer, but if they were to tweak their sell strategy, they could exponentially increase their returns.
Finally, understand position sizing so you never risk more than a small fraction of your overall portfolio on a single position.
In today’s video, Alex, Marc and Rachel discuss the other asset classes you should be considering right now in order to properly diversify your portfolio. Doing so will prepare you for any correction or down market that lies ahead.
And there’s one asset class that has “outperformed the broad market by a wide margin… not for the last 30 years or 50 years or 100 years but going back to the early 1800s,” Alex says.
Because despite the inevitable and the impossible, you can learn how to make money while playing it safe.
Playing it safe while leaving room for profits is the way to become a successful investor. After all, there’s a lot less to lose and much more to gain.
But if you’re not sure how to provide your portfolio with a smart exit strategy, Alex and Marc have the answers for you. They sat down with TradeSmith CEO Keith Kaplan to discuss one of the best methods to keep your portfolio healthy… no matter what the markets send our way.
Better yet, this strategy not only protects your investments but could also help you generate 4X more profit than you could without it.
If you’re interested in hearing what they have to say, just click here to sign up for the 4X Stock Booster Summit on March 16 at 8 p.m. ET. You’re not going to want to miss it.
Enjoy your Sunday,
Matt