"How are things going, other than this catastrophic market?" my dad asked me over the phone recently.
My dad's had a remarkable career. He worked 30 years and retired as an electrical engineer. His dedication paid off...
He has secured a pension that'll pay out for the rest of his life. So for the most part, his financial needs are covered.
Today, he gets to spend time at his leisure. And one of his hobbies is following the markets with a close eye.
Yep... My dad is now a market watcher. He tunes in on a daily basis. And the constant news coverage of the crash has him spooked.
"The Dow Jones is down more than 1,000 points today," he continued over the phone. I could hear the underlying fear in his tone.
It's bad out there. Both the Dow and the S&P 500 recently suffered their worst one-day declines since the global financial crisis.
People like my dad are spooked... But I haven't seen that fear spread to non-market watchers just yet. That tells me the bottom in stocks likely isn't here yet.
Let me explain...
Yes, my dad is worried today. And I'm sure if you've tuned into the news lately, you are too. But the fear hasn't reached folks who aren't following the market on a daily basis.
In fact, I've gotten several texts from friends asking me the opposite question... "Is it time to buy?"
I've also gotten multiple messages asking, "Hey, are you taking advantage of this market fall?" in some form or another.
Heck, I even have a buddy who's buying call options (betting on stocks to go up) right now. Sure, a few trades will probably go his way. But whether he is right or wrong isn't the point. The point is this...
Market bottoms don't happen until folks reach the point of maximum fear.
It's my friend's sheer confidence that stocks are going to take off that should concern you. He thinks the current downtrend is an opportunity. And most other non-market folks I've spoken with feel the same way.
Sure, for you and me, it's scary. But we keep up with this stuff. We understand that the fears are justified. But more normal folks are tuning in because they think they can make a quick buck.
When the real bottom arrives, these guys will want nothing to do with the markets. Their thought then won't be: "Is it time to buy?"
It'll be: "I'm never touching stocks."
That's the sentiment you see at major market bottoms. And that's when you want to step up to the plate and buy.
While we are seeing fear enter investors' minds... it's not there for regular folks just yet.
Combine that with the clear downtrend in the market, and it means that now is the time to be patient. Refresh yourself on your current investment plan. Follow your stops and live to fight another day.
The sentiment you'd expect at the bottom isn't here yet. When that changes, you'll want to be a big buyer of U.S. stocks... and not a moment sooner.
Good investing,
Chris Igou
Further Reading
"With the health concerns and economic unknowns created by the coronavirus pandemic, it's an understatement to say investors are panicking," Chris writes. Fear is at historic levels. And that means soon, a huge rally could be on the horizon... Read more here.
"Investor sentiment is absolutely terrible out there," Steve says. And while the uptrend in stocks hasn't returned yet, when it does, it could be the last great buying opportunity of the Melt Up... Get the full story here: This Is a Time of Fear and Opportunity.
When the point of maximum fear arrives, you'll want to be a buyer of U.S. stocks. Until then, these two strategies will help you navigate today's downturn...
THE CORONAVIRUS IS CRUSHING THIS VACATION STOCK
Today, we're highlighting a stock that has taken a huge blow from the new coronavirus...
You can't turn on the news today without seeing stories about COVID-19. There are now roughly 180,000 cases worldwide, and it could be a huge disruption to the global economy. We'll be keeping more of these stories on "watch" as this situation develops. Today's company has fallen victim to the crisis...
Carnival (CCL) is a $10 billion cruise company. It offers families luxury cruise vacations. But Carnival has gotten some negative press because of the coronavirus. Two of its Princess ships have had to be quarantined, with one having nearly 700 cases onboard. Now, it appears the virus could have a lasting effect on cruise bookings – Carnival has canceled all Princess cruises for the next two months.
As you can see in today's chart, CCL shares have plummeted. The stock is down roughly 70% from its January 17 high, and it recently hit its lowest level since 2008. The virus's effects won't last forever. But for now, the cruise industry could be set for more pain...
