It's the No. 1 question we're seeing right now...
"How do I time the top of the market?"
Readers want to know if it's time to put more money into stocks, or if it's time to take it all out.
This question comes down to one thing. And importantly, looking back at investor fear in the markets can help us answer it today...
Think about the last time you had to wait in line...
Like when you got stuck in terrible stop-and-go traffic. Maybe you took the next exit to find another route home... only to encounter more delays that cost you even more time.
This is a classic case of human behavior called "action bias." We're not programmed to sit and wait. We want to act... to take the next exit... to do anything but stand still.
Action bias is at the heart of investing as well. Sometimes the hardest thing to do with your investments is nothing.
One of the main drivers of action bias is something called "notional losses," or paper losses. Basically, at some point when our portfolio loses too much, we get scared and start selling. Think of it as our "breaking point." We can only sit still for so long. We don't want to wait for a correction or study up on cyclical activity. We see our stocks "slipping into the red," and we panic.
Resisting this urge to act helps in the long run. But that doesn't mean you should never sell, especially if you're retired or nearing retirement. You don't want to be stuck "holding the bag" when the market crashes.
So you end up with a major choice with your investments... When is it right to sit and wait, and when is it right to sell?
And more importantly, is it time to buy more if the market is already on an upswing?
That's exactly what my friend and colleague Steve Sjuggerud explained in a special presentation Wednesday night.
You see, we've seen dips and corrections in this bull market before. And if you listened to Steve those times, it didn't scare you off... It made you more eager to see the gains to come.
If you remember January 2016, the markets had a rocky start to the year. As I wrote then:
I know a lot of people are worried about their portfolio. Almost every stock in the S&P 500 is down. At yesterday's close, just 27 stocks in the S&P 500 were in the green.
And plenty of folks are wondering how they can still safely collect the income they need this year.
It's impossible to know whether this is the beginning of a bear market or just a temporary sell-off before this bull market climbs even higher. So right now, it's essential that you position your portfolio to do well in any type of market.
What's more, volatility isn't always a signal that the end is nigh.
I keep an eye on volatility using the Volatility Index ("VIX"). Lots of investors call it the "fear gauge" because it acts like a fear indicator. High volatility often points to fear in the market, while low volatility can mean that the market is growing more confident.
This month, the VIX is hitting the highest levels we've seen since March...
But more important... it was nearly double this back in early February when it spiked to more than 40. And guess what... it recovered. We went on to see more new highs in the longest-running bull market in history (and it's still going).
So don't let volatility scare you. Keeping a well-balanced portfolio and managing your risk will do a lot to protect you in the coming months and years.
Not only that, but as you know, Steve is predicting a huge late-market upswing. He calls it the "Melt Up." And knowing exactly when and how to take advantage of it could generate significant profits for investors in the months ahead.
As Steve said earlier this month here in DailyWealth...
- Just because stocks are expensive, it doesn't mean they can't go much higher.
- High valuations are a symptom of a stock market peak... but they are never the cause of a stock market peak.
Steve says the final Melt Up in stocks is around the corner. And in his presentation this week, he shared the latest details about when he expects it to happen... and how to get in on the profits.
It was one of the all-time biggest events we've put together at Stansberry Research. But if you missed it, that's OK. You can still watch a replay of the event online.
I strongly encourage you to check it out. It's one of the most important things you can do today to conquer your fear... and get the most out of your investments right now.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor's note: Steve made a huge revelation about the Melt Up at his big event this week. If you're still on the sidelines, or if you're looking for the best way to put money to work in the Melt Up, you don't want to miss this. You can still access a replay of the broadcast online... But it's only available online until Sunday at midnight. Watch it now.
Further Reading
"Many investors now have no plans whatsoever to buy more stocks," Steve says. "This is a huge mistake..." Find out why sitting on the sidelines could cost you right here: The Best Days of the Melt Up Are Coming.
"People are not acting irrationally yet," Brett Eversole writes. "Instead, they're worried." The recent volatility has investors spooked... And as he explains, this is a sign that we're not at the top yet. Learn more here.
After the recent pullback, stocks will likely make new highs in the coming months. And this technology giant could outperform along the way...
THIS INTERNET 'TOLL BRIDGE' JUST HIT A MULTIYEAR HIGH
Today, we revisit a telecom giant that's blasting through a volatile week for stocks...
Regular readers know that we've compared the telecom industry to a toll bridge. A toll-bridge owner spends lavishly to build a bridge, then sits back and collects the tolls... Similarly, telecom companies build expensive fiber-optic and wireless networks, then profit from monthly access fees. For proof, look at this telecom giant...
Verizon's (VZ) wireless segment serves 145 million people in the U.S. That's more customers than any of its competitors. The company's biggest project these days is introducing its 5G network – the highest-performing mobile communications system available – city by city across the country. This has led the company to much success... Verizon beat analyst expectations for revenue growth in the third quarter, reaching $32.6 billion in sales.
And as you can see, Verizon's stock has powered through the recent market volatility. Shares are up around 23% over the past year. And prices have soared close to their dot-com era highs. Clearly, investing in "toll bridges" can be a lucrative strategy...
