Are You Worried Or Excited For The RED Market?

Every time there is a market downturn, there are always two groups of people - 1) people who are extremely fearful  and 2) people who are extremely happy

In my experience, it is ALWAYS the second group of people who wins the game long term - period.

More importantly, do you know what separates between the two group of people?

Well - the answer is this...

Knowledge and Preparation.

Have A Long Term Mindset

I have repeated this over and over again...

...I know it doesn't feel good to see some of your positions in the red.

But when you stretch out your time frame to adopt a longer term mindset, the decision becomes obvious - you have to take advantage of ALL market downturns. It is as simple as that.

In fact, I have heard some of my most successful students say this, "I cannot wait for my next pay check to take advantage of this downturn!"

This is the same mindset I adopt as well - whenever there is a market downturn, the obvious course of action is to take advantage of it and hold these positions.

After all, time in the market is essentially what makes you the most money. Those who sell out of fear, will only look back three years from now in regret, thinking "if I only I held on to the stocks..."

Make Your Investing Judgement

All of my readers are adults - so it is only right to make some investing judgement.

Never be the person who is clueless about your investment simply because you blindly followed someone. Always remember this - borrowed ideas will never give you conviction. The moment you invest because you blindly followed someone, you will be a headless chicken when that particular stock falls. Meanwhile, the person you followed, is busy adding more positions to lower down his breakeven cost.

Whenever I see some of my stocks have fallen - my first action step is to not read the news but to read the fundamentals. People who write news articles only have one goal to get as many readers as possible. And quite clearly, people gravitate to bad news rather than good news. This is why, most of the news articles are always pessimistic and quite often, unrealistic. The only source that I trust is the fundamentals of the company.

"Is the company still making money?"

"Is the company's earnings still on an uptrend?"

"Is the company overleveraged?"

These are simple questions we have to ask and evaluate ourselves. Unfortunately, those who blindly followed do not have the answers to these questions, or worse, do not know how to find out these answers themselves - simply because they were blindly following the crowd.

Buy Stocks. Don't Buy Call Options

Whenever there is a market downturn, volatility increases. With an increased in volatility, it means only one thing - buying options become more expensive. For those who understand the concept of option pricing (intrinsic and extrinsic value) - you will know what this means fully well.

This is why I will not buy any options during a market downturn. Instead, I will either sell put options and GET EXERCISED. Or I will simply buy the stocks.

I have to emphasize "GET EXERCISED" over and over again - because till date, I still come across investors who thinks that getting exercised is a bad thing, and they keep rolling their options over and over again. Again, if you understand the P/L graph of sell put versus buying stocks - you will understand why getting exercised is actually better.

The Bottom Line

I cannot stress this enough.

Please take advantage of the market downturn and buy great companies at a crazy discount. Such opportunities don't come often and it will be a shame to miss it.

For myself, I only invest in "qualified stocks" which have served me very well over the years. If you are interested to find out what are these "qualified stocks", then make sure to check out the following training.