Posted May 09, 2022
By Zach Scheidt
Don't Just Do Something... STAND THERE!
"What should I do? The market is falling and I'm tired of losing money!"
My phone has been ringing off the hook lately. Friends and family want to know what's going on with the market and what they should do to protect themselves.
Here's the unpopular truth…
At this point, your best move isn’t to "do" anything. So I've been responding with one of my favorite ironic phrases.
"Don't just do something... STAND THERE!"
Let me explain...
It's Still Too Late to Panic
Last week I told you that it's too late to panic. Here's what I mean by that…
With the market falling and investors bailing out of stocks left and right, there's a good chance that any big decision you make right now will be an emotional one.
Frankly, emotional decisions wind up costing you money over time.
They cause you to sell stocks when markets are low, buy stocks when prices are high, and damage your family's wealth over time.
For several months, I've been sounding the alarm bells for speculative stocks that trade at extreme valuations.
These growth stocks simply got way too extended as thousands of new investors jumped into the market and started buying their favorite stocks.
It was only a matter of time before these inflated stocks got pushed back down to more reasonable levels.
And as speculative stocks have pulled back, fear has spread across Wall Street pushing some of the quality stocks down alongside the weak ones.
If you heeded the warning signs and invested in high-quality companies, your account is probably doing just fine.
Sure, some of your investments may be pulling back a bit. But they're not getting crushed like other areas of the market.
But if you didn't heed the warnings, I think we're finally at a place where it's too late to start panicking.
Stocks are oversold and we're probably just days — or maybe even hours —- away from a rip-roaring bear market rally.
So let's think about what that means for your investment account right now.
Stand There With Your High-Quality Stocks
I hope you're in a great spot with your investments. I really do!
If you have a balanced approach to the market with plenty of value stocks paying good dividends that will grow over time, congratulations!
The value of your account will still ebb and flow… but to a lesser extent than the broad market.
(You certainly won't have the same wild fluctuations that pure tech investors are experiencing right now.)
And as your dividend payments come in, you can use that cash to buy more of these high-quality stocks. Sometimes you'll even get to buy them on sale!
That's a great spot to be. And I hope that I'll be able to keep helping you find those high-quality investments that hold up over time.
And Stand There for Stocks You Want to Exit
On the other hand, if you're still invested heavily in speculative growth stocks, my heart goes out to you.
I don't blame you for being in the wrong place for today's market. But I do want to help you!
And the best advice that I can give you at this point now that fear is washing over the market is to hang tight
With the media focused on bad news, investors are bailing out left and right. And with uncertainty at its peak, you're not likely to get a fair price if you sell anything today.
So instead, I urge you to stand there for right now. But please make a list of the stocks that you're uncomfortable with.
(It's very important that you write this list down — don't just keep it in your head.)
Once we get a bear market rally, go through that list and sell the stocks that gave you so much concern when the fear levels were high.
Have discipline and please don't make up a new reason to hang on to them.
With a clean slate and a clear head, you can then use your freed up capital to invest in a basket of better stocks.
These will be the names that you can hold confidently even when the market is uncertain.
And these names will help you grow your family's wealth over time — in strong economic periods and weak ones as well.
I promise to help you find the best plays to protect and grow your wealth.
Will you promise to avoid making emotional decisions with your money?
Here's to living a Rich Retirement!
Editor, Rich Retirement Letter