Today's Carnage Is Setting Up Tomorrow's Profit

You don't get "once in a lifetime" opportunities without the carnage...

Don't take that idea lightly. It has to happen.

That's because once the carnage has torn through stocks, investors reset their expectations. They swing from "it'll come back" optimism to "there's nowhere else but down" hopelessness.

It's a painful cycle. But there's always this silver lining...

When the markets have gotten so bad that nobody wants to buy, life-changing buying opportunities show up.

Today, we're nearing one of those opportunities.

Let me explain...

This cycle has played out time and time again.

Think about U.S. stocks in late 2008... We were in the depths of the financial crisis. Nobody knew if the financial system would survive. The S&P 500 Index fell 57% peak to trough.

It was all but hopeless. And most investors threw in the towel entirely.

But then, something happened... The world didn't end. Instead, stocks entered the second-longest bull market in history, soaring more than 400%.

It was the same story with gold at the turn of the century...

The metal had been mostly dead money for decades. Absolutely no one wanted to think about, let alone invest in, gold. It was as hated as an investment could be – or so it seemed.

Then, gold prices fell 38% over five years from 1996 into 2001. But that final crash set up the buying opportunity of the decade... The metal soared more than 280% from 2001 into 2008.

The cycle is as old as the financial markets. And it's playing out again right now. Unfortunately, we're in the thick of the carnage.

The past 10 months have been brutal for U.S. stocks. The overall market dropped 25%. And the high-growth investments that thrived in 2021 are down 50%... 60%... or worse.

Investor sentiment has tanked. Everyone is scared. No one sees opportunity. They just see more things that could go wrong... and more ways for the market to inflict pain on their portfolios.

It's not just stocks either. Gold and silver are underperforming. Bonds are crashing as inflation remains high. There's nowhere to hide.

This is what it looks like when dark times settle over the market. The pain is widespread. And it starts to feel like the bear market will never end.

It always does end, though. That's the good news. But to survive the carnage while it lasts, you've got to change your mindset...

You have to limit your exposure. You have to follow your stops like they're written in stone. And you have to bide your time, figure out what you want to buy when things turn around, and be ready to pounce when the trend reverses.

We're not there yet. But a "once in a lifetime" buying opportunity is setting up. Be ready to take advantage of it when the time comes.

Good investing,

Chris Igou

Further Reading

"Once investors think the world is ending, you don't need things to turn all the way around to 'good' to make a lot of money," Chris explains. All you need is for the markets to get a little "less bad." We've seen this over and over again in times of crisis... Learn more here.

"The pros are the most bearish they've been in decades," Brett Eversole writes. Fund managers are betting that the bust will continue. But this was a contrarian indicator back in 2008 – and importantly, the "pain trade" suggests that it's a bullish signal today... Read more here.