1. There is no rush. No rush whatsoever to do anything. Seriously. Just sit and watch, and watch. Who cares if the market rips higher on a random day like it did this week after the Fed. The Nasdaq-100 alone is down almost 25% since the start of the year. Okay, so it spikes 2% in a day… it still needs to climb an absurd percentage to get back to even. Plenty of time to watch, wait, and find a really nice entry. Patience is on your side right now.
2. The last few years were truly bull market mania. One could argue making money wasn't that hard – just buy a growth stock! Those days are over. The amount of research you have to do now is endless. If you don't spend at least several days (probably weeks) diving into a company, its earnings reports, expectations, valuation, trading range and volume, then don't even think about buying. With time on your side, do the necessary research now more than ever.
3. Zoom wayyyyyy out. Last I saw nearly 2,000 stocks were down 50% or more over the last 12 months. Cut in half! 2,000 stocks cut in half in 12 months. Zoom way out and really understand where the stocks you're interested in have come from. Ask yourself about their previous drawdowns and study those. Where and when was the IPO? Where did it trade at 10 years ago? 5 years ago? You get the idea. The last 12 months are meaningless now.
4. Look at what the founder, managers, and largest holders are doing. Are they themselves buying more or saying things you agree with? The interesting thing is that in this social media age, you can find founders and managers tweeting, on Youtube, podcast interviews, or publishing around the web about their company thoughts! Go check out their thoughts and make sure you are aligned with them. Especially now. Don't buy any company when you don't agree with what the key people are writing or talking about.
5. This last comment is more-so for everyone who is trying to day or swing trade because they think they can catch a bottom. If you don't think a company can be here in 5 or 10 years, why even risk money on it for 30 minutes? If we really are in a bear market, well, they can last up to two years. Sometimes, they can last up to several years chopping sideways time and time again. Stick to quality, understand the brand, and the long term vision.
That's it! Hope you enjoyed this post!
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