"I appreciated hearing someone who's openly bullish," a reader told me at our annual Stansberry Research Conference & Alliance Meeting in Las Vegas last month.
I heard similar comments from other folks throughout the week. Apparently, the talk I gave early on the first day of the event was a breath of fresh air for many.
I spent my 30 minutes outlining all of the good things happening in the U.S. stock market. And I explained why I think stocks can soar for years to come... eventually hitting highs that seem unimaginable today.
That wasn't an easy message to deliver a few weeks before a hotly contested U.S. election. But at the end of the day, there's always something to worry about.
You don't need to waste time worrying as an investor. Instead, you should remember this...
It pays to be an optimist. That's true in life – and it's true in the stock market.
Today, I'll share why it's actually prudent to be an optimist... especially if you put a few smart measures in place.
There have been plenty of reasons to question the current bull market. Folks are worried about the economy and whether inflation is truly dead. Geopolitical tensions are high. And it feels like everyone is waiting for the stock market to turn over.
That last fear looked like it was about to come true over the summer. Stocks fell nearly 10%, almost hitting an official correction. But instead of sinking further, stocks turned around... and kept climbing the "Wall of Worry."
The rally kept up heading into the presidential election. And now that the election uncertainty is behind us, stocks are rocketing to new all-time highs.
You might think this is investor hubris... or a disaster in the making. But I'd frame it a different way...
It pays to be an optimist. And it pays to stay long when a bull market is underway.
Today, we're in the middle of a powerful boom. We're two years into the kind of secular trend that typically lasts for a decade or more. Simply put, you shouldn't spend too much time questioning that until things change.
That doesn't mean you should be blindly bullish. We're fully aware of things that could go wrong. But until they do go wrong – and stock prices begin to fall – you shouldn't act based on fear alone.
After all, we make money at exactly these times – when the market is rising.
So, instead of hesitating, be an optimist. Assume the best... But have a system in place in case things do go wrong.
The simplest way to do that is to use stop losses. A simple 25% trailing stop works wonders to limit your overall risk.
A trailing stop rises as your position rises. Then, if your investment ever falls more than 25% below its most recent high, you sell.
It's that easy. Stop losses limit your overall risk. Plus, they give you a concrete plan for when to sell. And that will give you peace of mind, even in the most uncertain times.
Successful investing is about staying optimistic while also managing risk. "Positive" doesn't mean "naive." History shows this is the right posture to take almost all of the time.
So remember, it pays to be an optimist. Next time the market spooks you, focus on that. Your returns will be better for it.
Good investing,
Brett Eversole
Further Reading
"All the fear looks a lot less rational when you realize how profitable stocks have been," Brett writes. This year, the S&P 500 had one of its best performances through October ever. And history shows a higher market by year-end is almost a certainty... Read more here.
At any point in market history, there was likely a reason to sell. We're just a few years removed from a global pandemic and days past a presidential election. But letting fears like these affect your portfolio is a mistake... Learn more here.