[WATCH] Closing Bell — The Panic Begins
In today’s Money Weekend…there will be some great opportunities once the dust settles…tech stocks are the obvious standout…why the next six months will be so important for your financial future…and more…
For the last few months, I have been preparing you for the sell-off we are witnessing now. I hope you have listened to my warning and are prepared for the coming volatility.
There will be some great opportunities once the dust settles on the current correction. But you can’t take advantage of opportunities if you are panicking out of bad positions like everyone else.
The market moves in cycles, and you have to get in tune with those cycles. There is a time to buy with your ears pinned back, and there is a time to sit on your hands and protect the capital you have.
Avoiding losses is the first step on the road to making money consistently.
Most traders are itching to be active and can’t wait to be fully invested regardless of market conditions. Learning to exit positions and sit in cash for extended periods of time is a hard lesson to learn.
Once you have been through a bear market or two, you finally learn that it’s easy to lose everything you have made in the bull market when things turn bad.
The small- and mid–cap sector has been in a slow-motion crash for the last year and a half. Former market darlings have cratered, and many retail investors have been badly burnt.
The market has lost patience with companies that have grown fat on the back of shareholder support and remain in a negative cash flow situation.
Tech stocks are the obvious standout, but biotech stocks are also coming under pressure since their promise of revenues is always years in the future after risky and expensive trials.
Fundamental valuation means little when there is a hoard of people running for the exit at the same time.
That’s why small-cap stocks can go from $1.00 down to 5 cents and then back up to $1.00.
When we sift through the rubble at the end of this, there will be some gifts on offer. But if you jump in and catch a falling knife, you will be skewered before the real rally begins.
That’s why the next six months will be so important for your financial future. Remaining patient while the downside volatility is occurring but acting swiftly when the buy signals start showing up is the name of the game.
I give you an update on the current state of play now that the S&P 500 has cracked beneath major support in my latest instalment of the ‘Closing Bell’ below. I also look at the recent rally in the US 10-year bond, the breakout of the US dollar, and the sharp fall of the Australian dollar.
Until next week,
Editor, Money Weekend