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How to Not Be Naked and Afraid in Bear Markets

How to Not Be Naked and Afraid in Bear Markets

Why did you invest in stocks?

You had other alternatives…

You could’ve easily bought a 10-year Treasury note.

Your principal and interest rate are guaranteed by the U.S. government.

You’d have no surprises or worries about the ups and downs of interest rates.

There’d be zero chance of losing your money.

Or, you could’ve invested in precious metals, such as gold or silver.

Instead of owning a piece of paper, you’d have something physical.

You could take it out of your safe to touch and admire.

The returns on precious metals aren’t the best, but at least you could cuddle with your bullion.

But the reason you bought stocks is simple…

No Competition

You wanted the highest returns.

U.S. government notes are liquid, but their returns are pretty low.

And precious metals don’t produce anything and cost you money to store.

But stocks are a no-brainer.

They’re easily bought and sold.

And just take a look at how they’ve performed over the very long term (210 years)…

 

Source: Stocks for the Long Run by Jeremy Siegel

U.S. stocks have outperformed Treasury bills by almost 3X and gold by more than 6X.

A $1 investment in stocks would’ve returned more than $700,000. The same $1 investment in bonds would’ve returned less than $2,000.

Unless you live as long as Methuselah — who had the longest lifespan in the Bible (969 years) — you don’t have a two-century time horizon.

I get that, but I want to make a point…

Being an owner of a piece of a business is hands down the way to grow your money.

Nothing even comes close.

What prevents investors from investing in stocks is the ups and downs of the stock prices…

Flipping the Script

If stocks steadily returned 6.6% — like they’ve done over the past 200 years — it’d be easy.

But stock prices don’t have steady increases each month.

Instead, they bounce all over the place.

And that’s a big shame for most investors.

They’d be a lot richer if they knew how to turn volatility into an advantage.

So, in tomorrow’s Real Talk, I’m going to share with you how to flip the script.

It’ll be like giving you the keys to the kingdom.

And it’s a lot easier than you would think…

Regards,
Charles Mizrahi

Charles Mizrahi

Founder, Alpha Investor

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