Market Outlook — Russia/Ukraine War
Editor’s Note: In light of the geopolitical events taking place today, we’re holding our original Bold Profits Daily to give you an urgent message from Paul and his outlook on today’s market volatility.
While you may not want to hear this today, you must try to have Strong Hands right now. Be bullish, be optimistic, be positive.
I know it’s hard.
By now, you know what’s happening with Russia and Ukraine. So I’m going to stick to how it pertains to your stocks.
In my three-decades-long investing career, through market corrections, crashes, recessions, inflation, interest rate spikes — and yes, even wars — I can tell you that staying IN through these periods is when it absolutely matters the most.
No one was prepared for the COVID pandemic. Yet, it accelerated our America 2.0 mega trends.
I believe we’ll see another takeoff acceleration moment. And we are perfectly positioned for it.
There are a lot of emotions right now. But to make money in the market, you have to take emotion out of the picture.
So please, keep Strong Hands. Watch my market outlook here:
This is Paul. I’m sure by now you know the news. Russia invaded Ukraine last night. If you have been following the news I’m sure you know this has been setting up for a number of weeks. Now, the event has actually happened. While it may seem selfish to purely talk about our investments and stocks, I am going to leave the foreign policy stuff for the newspapers.
I am sure you will get analysis of that every single day from the newspapers and the web. I am going to stick to what I know matters to you, which is the stocks you own as a result of subscribing to our services.
Where Is The Stock Market Today?
Let’s start with where we are and then let’s go to where I believe we are going.
Where we are today is that we have had a geopolitical event, Russia invading Ukraine. I want to tell you a little of my own personal history of having been through events like this. I was an analyst when 9/11 happened and when the U.S. started to go into Afghanistan.
I was managing money when the Iraq war happened and when we invaded Iraq to free Kuwait. There have been any number of additional events. You will actually see a list of them in the email in which this video is located. You will see if you are willing to look out a little bit, the longer-term reaction from these events is actually positive.
That was my experience after 9/11 when prices got bid up in a big way and it was also true after the Iraq war. The initial moment is always panic and fear. You know the financial media will sensationalize it because they depend on clickbait for you to read it.
There will be very little true, forward-looking analysis. I can tell you from having been in markets for 30 years that the natural instinct is to look backward and try to form fit what has happened today to something that has happened in the past. In other words, something in the past is going to repeat itself.
Where Is The Stock Market Going?
However, the future never works out like that. Today I want to lay out for you where I believe our future lies and why I believe we have the absolute pitch-perfect strategy for where it’s going.
The world of having things made in all kinds of places, then put together in a second place, assembled in a third place and finally shipped to a fourth place, I believe that’s going to turn out to be unsustainable because it depends on countries like Russia following certain rules.
It means technology and innovation are going to be the way we look to move away from the old ways of doing things. That means that’s our companies. Truthfully, as I was reading last night and thinking about this, the answer to so many of the questions as to how to go about increasing our security so we are not so dependent on other countries is to use technology.
For example, 3D printing. I won’t get into the investment case for 3D printing. All of you know this already. I just wanted to give you a little bit of a sense of why, while you may not want to hear this today, there is very good reason to be bullish, optimistic, positive.
Just like no one was prepared for the pandemic, yet it accelerated the products, services and technologies of our companies, I believe we will have something similar happen again now. The reaction is going to be to come in and buy stocks of companies that can mitigate the risk this invasion represents.
The globalized world we have come to depend on to get all our products and services is, long term, unsustainable. The way out is through innovation and technology, the increasing adoption of America 2.0. I believe we are going to see another accelerating moment just like we had in March 2020.
It may take a few days, it might take a few weeks. However, I believe you will start to see it sooner rather than later. We own the perfect portfolio for this. While I know it has been a difficult 2022 thus far and the second half of 2021 was quite difficult, I still believe we are positioned perfectly for what is going to happen.
Try to be strong hands. Try to stay bullish, optimistic, positive. Make sure to read the email in which this video is. I also asked the team to include a story from 2008 of dealing with a client that was a very difficult situation. The client was very emotional.
I tell in the tweet that he actually came to hit me. He was that angry. I understand all of you may feel a lot of emotions, but to make money in the market we have to keep control of them and stay focused on our mission and purpose.
I can tell you having thought about this all night, watching prices all night, reading and thinking about this, I believe we are right. I believe we are going to be rewarded. I believe the stocks we own are the right ones to own. They can go up and go up big.
This is why I am still bullish, still optimistic, still positive. Be strong hands. Please look out for the updates where we will be covering the impact of this event and what it means for our stocks across all our services. This is Paul saying bye.
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I sent you a longer note earlier today on this. If you missed it, you can read my full analysis here:
First, I want to acknowledge a few things. I know how incredibly hard it is to be the Strong Hands at times like this.here. But the short of it is that after calming him down and encouraging him to keep Strong Hands, he later saw that our advice to him was right.However, I’m still very much bullish, optimistic and positive (#BOP) on our stocks — and although it’s a tough ask, I urge you to try your best to keep the same outlook. Because throughout the past three decades of my investing career, through market corrections, crashes, recessions, inflation, interest rate spikes — and yes, even wars — I can tell you that staying IN through these periods is when it absolutely matters the most. I’ll take you back to late 2008. We’re in a recession, an ongoing war and a housing crisis. A Dutch client came in for a meeting with our hedge fund team. Our portfolios were down and he wanted us to sell and take our losses. He was angry. Irate, even. He was a much bigger guy than I am, and truthfully, I thought he was going to get violent. You can read my tweet stream for the long version of the story
However, I can say that our advice to him was right. A few months that same portfolio was well over the point where he wanted us to sell to lock in our losses. A year later, it was at a profit. Another year later, the gains were so large so that the low prices seemed unreal.
— 🇺🇸Paul Mampilly (@MampillyGuru) February 24, 2022
Here’s the truth — what I’m encouraging you to do is the very same strategy I use to make money myself and used in the past to make my clients millions. I know that it’s incredibly difficult. But I tell you to keep Strong Hands and remain #BOP because it works.And if you sell during the downs, you rob yourself of the potential gains you could have made if you ignored the fear, uncertainty and doubt (FUD) we’re all feeling right now and held on for the recovery. Because a loss is only realized as a loss if you sell.
And many of you are skeptical, even cynical that we'll ever make our money back. I can tell you personally that in 2008 and then again in 2016, we saw this kind of volatility. And the gains from the lows were preposterously large. Ridiculously large.
— 🇺🇸Paul Mampilly (@MampillyGuru) February 24, 2022
Truthfully, this is how I made a ton of money in both those periods. I just held on to what I owned and then the recovery started and kept going and going and going and going. Stocks that were once down 50% or more, had gains that were unimaginable.
— 🇺🇸Paul Mampilly (@MampillyGuru) February 24, 2022
As for my outlook on the Russia/Ukraine conflict, the team and I did a little digging into the subject of war and its historical effect on indexes, particularly, the S&P 500 Index.And according to a study by LPL Financial and as reported by Investopedia, though geopolitical conflicts and wars are very traumatic events, from a financial markets’ perspective, U.S. stocks have historically weathered geopolitical conflicts well over the longer term. See below:
LPL Financial tracked major market shock events from 1941-2020.As detailed in the above chart, the S&P 500 Index declined an average of 1.2% on day one of the market shock event. The S&P 500’s total drawdown (the maximum percentage index drop) over the course of a geopolitical conflict or war was an average of -5%. The number of calendar days it took for the S&P 500 to hit a bottom during a market shock event was 22 days, while the number of days it needed to recover to levels seen before the shock event occurred was 47 days. This historical study shows that financial markets are resilient, and that wars and geopolitical conflicts often have “little sustained impact on stock markets or economic growth” stateside. So while our stocks will experience some short-term pain, this conflict will largely be shrugged off in the market in the long term. And the long term is important, because that’s exactly why we’re in our stocks for three to five years — to give these growth stocks time to do what we’ve recommended them to do — grow. Same for our options services, which is why we recommend trades with longer expirations — to give them time to recover through the ebbs and flows of the market. But it won’t happen overnight. There will be volatility along the way. However, I’m still BOP that in the long term, the upside is on our growth stocks, and they will be largely unaffected by this conflict. So please, keep Strong Hands.
Editor, Profits Unlimited