Are you getting scared yet? I want you to take a few minutes and meditate on how you feel about investing right now.
The stock market has sold off a couple percent, yes, just a couple, and volatility has risen to almost the normal average. That’s right, volatility isn’t above average yet.
Are you jittery? Do you regret not being more in cash? Are you paralyzed with fear? If any of those are the case, you need to get over it.
Volatility is the best time to invest for several reasons. First off, this is when we can get some of our favorite assets, the best of the Very Short List, at better prices. Second, we’re put sellers, or at least you are learning, and premiums get very fat during volatility, it’s easy to make a double digit return with just a few puts sales. Finally, by now we should know that all volatility passes eventually. Even the 2008-09 financial crisis only took two years to pass.
We need to look at what is going on as an opportunity. That is what it is. We prepared for this. I told you repeatedly the past few months to be about 25% in cash and up to 50% was okay too. Last week I said, “It’s not a bad idea to click it up to about 37-38% cash now either. The odds of a 20% plus correction just keep increasing.”
If we get that 15-20% correction, or a bit more, we’ll have some nice things to buy at fair prices. If we get a 30% or more correction, we’ll actually be on sale. We should love stock sales.
So, let’s not be emotional. Let’s keep our eye on the prize and not let fear guide us. Let’s use the market, which is largely a measure of mass psychology, to our advantage.
The markets are going to open down today again and volatility continues to rise. There’s probably nothing quite ready to buy ye, but we might be selling more puts soon, including on some new VSL components.
Kirk out, but not out for long, ETFs and stocks to buy on corrections out this morning.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I own a Registered Investment Advisor – https://BluemoundAssetManagement.com – however, publish separately from that entity for self-directed investors. Any information, opinions, research or thoughts presented are not specific advice as I do not have full knowledge of your circumstances. All investors ought to take special care to consider risk, as all investments carry the potential for loss. Consulting an investment advisor might be in your best interest before proceeding on any trade or investment.