URGENT: Please don’t sell your stocks until you read this…
It’s looking like a rough start to the week in the stock market.
As I write this to you, stocks are selling off as investors panic over the spread of coronavirus.
[%= :subscriberName(E, Reader) %], this is starting to look like a bigger deal than we originally expected.
It’s a troubling time, not just for our investments, but also for the many individuals affected by the virus.
We’re talking about factories shutting down, jobs that are being put on hold, and of course thousands of people catching the virus and getting sick.
With so much uncertainty, it’s not totally surprising that the market is trading lower. But I wanted to get this note out to you quickly to help you make smart decisions that will benefit your wealth and help you avoid danger.
So please read today’s note carefully. It could make a huge difference for your retirement income!
Don’t Panic, But Don’t Be Cavalier
Alright [%= :subscriberName(E, Reader) %], the first thing I want you to do is take a deep breath.
It can be disconcerting to see the market down several hundred points, or to see your account balance lower than it was a week ago. I get that — and I have the same frustration when I pull up my own investment account.
But it’s important to remember that investors who make quick reactive decisions to situations like this typically wind up regretting their impulsive trades.
It’s much better to think through the situation carefully and then to make logical well-planned decisions with your money.
As a seasoned investor who’s been through a few stock market corrections, I can tell you that panicking never puts you in a good place financially.
But there are some important moves you can make right now — as long as you keep a level head and think about them carefully.
The first thing I would suggest is to take a look at your investment account and circle the stocks that you hold as long-term positions.
I’m talking about the stocks that you own because you believe in the business and because you expect to receive dividend payments for years to come.
These stocks are not only great cash-generators, but they also typically hold up better than some of the more speculative stocks in the market. So rather than selling these reliable companies, I’d be considering buying more, and taking advantage of discount prices.
On the other hand, you may have some more “speculative” or “trading” positions in your account.
I’m talking about some of the more popular growth stocks that have been in favor over the last several months (and really the last several years).
Social media companies, streamlining entertainment, semiconductor stocks and other tech or consumer stocks fit into this category nicely.
If you’re holding positions with very big gains in these areas, I think it makes sense to take some profits off the table right now. Depending on how much risk you want to take out of the market, you could consider selling a third to maybe half of your shares.
After all, these are the names that are likely to take the biggest hits if the market continues to trade lower on coronavirus fears.
By taking some profits off the table, you’ll not only be protecting your wealth, you’ll also be giving yourself extra cash to buy new investments at a discount once the market stabilizes!
Now, here’s my second piece of advice for today’s turbulent market…
Look for Alternatives
“The housing crisis was the best thing that ever happened to me.”
I made a new friend Billy last week. We met at the neighborhood coffee shop where I like to get some of my writing done.
Billy is an older “salt of the earth” gentleman with a ball cap and heavily-worn jeans. But from what I can tell just talking to him over coffee, he’s worth several million dollars.
We were talking about the market and the economy, and that’s when Billy told me his strategy during the financial crisis from 10-years-past.
“I bought every house they would let me have” Billy said with just a hint of pride in his eyes.
“After all, they were selling for pennies on the dollar!”
Rather than panic during the last market selloff, Billy made a very wise decision. He invested in some off-market plays that wound up making him hundreds of thousands of dollars.
Sometimes we think that the stock market is the only place to invest and grow our wealth. But that’s hardly the case!
Just like Billy bought actual houses to grow his income and his overall wealth, you can do the same in today’s market!
I still believe real estate is an excellent place to put your money. You can buy residential properties and enjoy income from rental payments. And with so many people looking for homes to buy, the price of homes in most key U.S. markets continue to move higher.
Another off-market place to grow your wealth is through precious metals like gold and silver.
With the coronavirus leading to fears of an economic slowdown, the Fed (and every other central bank around the world) is considering cutting interest rates. This is a good tool for encouraging market growth.
The only problem with exceptionally low interest rates is that it can spark inflation.
As interest rates fall (again), investors will look for ways to protect against potential inflation by buying gold and silver.
We’re already seeing a dramatic breakout in the price of gold this month. And I expect this momentum to continue. So while it’s a good idea to own some gold in your account for the long-term, now is a good time to pick up some extra exposure to gold to profit from this wave of investment in precious metals.
Make a List Before You Shop
Here’s my final piece of advice for today’s turbulent market: Make a list before you buy.
My daughter Avery started college this past year and is living off campus. She’s learning to juggle her own finances on top of taking a full load of classes.
One piece of advice I gave her when it comes to weekly grocery shopping is to make a list first.
She’s seen me do the same for our family since she was a little girl sitting in the grocery cart.
Making a list ahead of time allows you to objectively think through the smart things to buy, and resist the impulses that can cause you to make bad decisions. (Like buying the brownies on sale — or buying a speculative stock just as the market starts moving lower).
I’m building my own buy list today, looking at stocks of stable companies with reliable earnings and growing dividend payments. These are great stocks that can help grow your income dramatically over time.
Now please hear this: I’m not telling you to buy these stocks YET.
After all, this may be just the beginning of a broader selloff.
But if you start putting a list together now, you’ll be in a perfect spot to capture more income, and build your wealth — just like my friend Billy used the last major selloff to lock in hundreds of thousands in profits!
We’ll be keeping a close eye on the action.
And as always, I’d love to hear your questions and thoughts on the market. I’m hoping we can put together a Q&A session later this week!
Send your feedback to EdgeFeedback@StPaulResearch.com.
Here’s to growing and protecting your wealth!