Three simple ways to prepare for a market crash
Oct 01, 2021Good morning!
There are two sides to every market and two kinds of people – those who will make money and those who won’t. And I know where I want to be … how about you??!!
Here’s my playbook.
1 – Three simple ways to prepare for a market crash and why you should (even if there isn’t one)
Millions of investors are on edge because they fear a crash. Here’s how you get your investments ready yet stay in the game. First, own shares of inverse funds that appreciate when the stocks they’re tied to go down. I recommend several in One Bar Ahead™, my monthly investing journal. Second, decide what stocks you’ll keep and what stocks you’ll sell using trailing stops or profit targets NOW, ahead of time so you don’t get caught in the heat of the moment. Third, have your buy list ready; ideally, you’ll want to focus on companies you missed the last time around or to which you’ll want to add shares. Big dividends, future-focused management and low beta will help stabilize your wallet and your worries.
My POV: Prioritize companies that have already moved through this crisis.
2 – The smart money is already on board
Merck (MRK) and Ridgeback Biotherapeutics announced “compelling results” for an oral covid treatment called Molnupiravir in clinical trials. Merck shares are up 9% in the early going ahead of the open. Pfizer (PFE) is working on its own oral antiviral treatment while Gilead’s (GILD) remdesivir was approved for emergency use a year ago.
Think twice if you don’t own at least one of these stocks. I own Pfizer and Gilead myself because I think they’ve got broader applications when it comes to taking what they know from the virus and translating that into other aspects of their portfolio. I may yet buy Merck, too.
3 – This stock could be the single worst internet play for investors
The pressures we correctly identified last month when I said to avoid Facebook (FB) like the plague are mounting. Shares have dropped -11.7% from a 52-week high of $384.33 to $339.39 where it’s trading pre-market as I write.
Internal documents reveal that the company knew Instagram is harmful to some teens. No word on Facebook itself but I’d bet dimes to dollars Team Zuck knows that too. Not coincidentally, Facebook’s head of global safety spent much of her time at a recent hearing dodging questions from angry lawmakers.
Time to ghost Facebook, permanently.
4 – Shares have been beaten down so it’s time to order “up”
People think of McDonald’s (MCD) as just burgers and ribs every so often. What most are missing is that the company is investing heavily in technology that improves orders, boosts margins, and generates more sales more accurately than human counter workers. The app has more than 20+ million users today and is a raving success. I’m lovin’ the 2.29% dividend, too.
5 – A $90 million OOPs has CEO begging to get money back
There’s a popular DeFi protocol called Compound, a blockchain enriched with smart contracts that are intended to recreate standard banking systems and exchanges. Apparently, an upgrade resulted in users receiving $90 million worth of Compound’s native tokens, COMP. Now the CEO is begging users to give it back.
And cryptocurrency proponents are worried about digital money being taken seriously??
Doh!!
And on a related note, El Salvador has apparently mined the first volcano-powered bitcoin, some $269 in total. But hey, it’s a start and, admittedly, one I actually think is pretty cool.
Bottom Line
The doom and gloom crowd is out in force in recent days and up to their old tricks with emails and stories intended to prey on your fears.
Pay them no heed.
They’ve predicted 10 of the last 2 recessions. Worse, many have been singing the same tune since 2009 and, worse, have missed the entire rally as has anyone following their brand of self-indulgent misery. They’ll be right eventually but, hey, even a busted clock is correct twice a day.
Focus on winning instead. That’s the actual path to profits and how you build real, sustainable wealth over time. My research shows that holding a carefully chosen concentrated portfolio of 15-20 stocks results in a positive return 97% of the time when held in five-year blocks.
Simple. Powerful. And, chances are, profitable too!
I’m with you every step of the way.
Let’s finish the week strong.
Keith :-)
